Quote from: JoelKatz on June 22, 2011, 01:55:00 AM

Quote from: NoodlesJefferson on June 22, 2011, 12:50:18 AM

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If you read my original question I give the example of, if someone pays you 10 bucks an hour and inflation hits at 10% a year. Why, in 10 years time, wouldn't your employer fire you and hire 10 other people at 1 dollar an hour?

Because he couldn't afford to. If he can't afford to hire 10 employees at market rates today, why would you think he would magically be able and willing to do so in 10 years?

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The only other option for the employer that I can think of is it would be common place to pass out a standard of living adjustment and pay you less every year. That or labor would start to get underpaid in order to counter act deflation and keep employees. Either way it doesn't promote employment longevity and job stability. It seems to be the same problem as inflation just in reverse.

It's precisely the same problem, which is why it's no problem at all. You can make the same argument about inflation -- employees constantly demanding raises will piss off employers and hurt employment longevity and job stability. But that's obviously not true. It really makes no difference.

Because firing the employee hired ten years prior frees up 10 bucks an hour for the employer to now spend. Whether or not he chooses to spend that on hiring 10 new employees or hiring 1 new employee at 1$ an hour to replace the previous and pocketing the extra 9 bucks doesn't matter. Its that in 10 years the 1st employee is now too expensive and can be replaced by cheaper labor.

And regardless if it is the same problem or reverse problem or not I don't care. I'm not arguing that, I'm not arguing anything.

However, my question is does an Austrian school economy hurt job stability? Seems like most people in here say it will hurt it more so than in an inflationary economy. Or cause employers to pay out lower wages then what the employee time is worth in anticipation of deflation. The burden of employment longevity seems to be on the employee rather than the company in a deflationary economy. And the only way around this seems to be cost of living adjustment where a company would pay you less every year to make up for deflation.