Source: Foundation for Economic Education
by Patrick Carroll
“Reich uses a central diagram throughout the video to illustrate his point, displaying businesses and workers and the flow of money between them. The idea is that businesses can only create jobs when workers spend enough money, but the workers can only spend enough money when they have enough purchasing power, and they can only have enough purchasing power if the businesses they work for are paying them enough. Thus, the economy can either be in a vicious cycle or a virtuous cycle, depending on how well workers are being compensated for their labor. It’s an intriguing story about how the economy works. But is it true? Well, not exactly.” (01/22/24)
https://fee.org/articles/responding-to-reich-part-8-the-enough-to-buy-back-the-product-fallacy/