I had an interesting notion today regarding the world economic crises. Right now, the government is thinking, that for stimulus large amounts of credit should be injected into the economy.

I once read that years ago, an economic study showed large companies would make more money if they increased wages. Those companies for which that would work were large enough that by them increasing their wages, then to compete for workers other similar companies and even those in other industries would be forced to follow suit. As a consequence enough people would have spending money to buy more of their product, which ultimately would result in large profits than they would arrive at if they cut wages as aggressively as they could.

It is also true that national fuel economies are affected most by raising the economies of those (alas large) number of cars with poor gas efficiency first.

Putting those two notions together, perhaps the best thing to do would be to encourage those corporations hiring overseas labor to raise the wages they pay them. Chinese and Indian workers can get as little as $2 per diem in wages. Raise that to $2 per hour and … you’ll soon have a large number of people with disposable income … needing goods … needing automation … fueling a global economy.

Filed under: Economics & TaxesMark O.

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