Japanese Prime Minister Shinzo
Abe recently vowed to press companies to raise wages. His vow
should have set off alarms among economists. Instead it elicited applause. The
irony is thick but only economic historians and Austrian economists can
appreciate it. Even the financial press missed it.
The irony lies in the fact that the first thing US President
Herbert Hoover did when he discerned the approaching disaster of the Great
Depression was to employ the persuasive power of his office to convince
employers to refrain from cutting wages and attempt to raise them. The Wall
Street Journal of December 16, page A11, quoted Mr. Abe saying,
As I toured the nation during the election, I heard the opinions of ordinary citizens who are suffering from price increases and small-business owners in difficulties due to price hikes in raw materials.”
