TAILIEUCHUNG - Riding the Waves of Culture Understanding Diversity in Global Business 3E_2

Tham khảo tài liệu 'riding the waves of culture understanding diversity in global business 3e_2', kinh doanh - tiếp thị, quản trị kinh doanh phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | A Failure of Capitalism will suppliers respond If a critical assumption all prices including the price of labor wages are completely flexible suppliers including suppliers of labor workers will reduce their prices in an effort to retain as many buyers as possible. With consumers saving more because they are buying less and at lower prices interest rates earnings on savings will fall because there will be a savings glut. The lower interest rates will induce borrowing and with more borrowing and lower prices spending will soon find its way back to where it was before the shock. One reason this will happen is that not all consumers are workers and those who are not and whose incomes therefore are unimpaired will buy more goods and services as prices fall. The flaw in this classical economic theory of the self-correcting business cycle is that not all prices are flexible wages especially are not. This is not primarily because of union-negotiated or other employment contracts. Few private-sector employers in the United States are unionized and few non-unionized workers have a wage guaranteed by contract. But even when wages are flexible employers generally prefer when demand for their product drops laying off workers to reducing wages. Think 2 The Depression and Its Proximate Causes of all the financial executives who have been laid off even while bonuses often amounting to half the executive s pay were being cut sometimes to zero. There are several reasons that employers prefer layoffs to cutting wages. 1 Layoffs reduce overhead expenses. 2 By picking the least productive workers to lay off an employer can increase the productivity of its workforce. 3 Workers may respond to a reduction in their wages by working less hard or conversely may work harder if they think that by doing so they may reduce the likelihood that they will be laid off. 4 When the wages of all workers in a plant or office are cut all are unhappy with layoffs the unhappy workers are off the premises.

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