re: cmc 5 minute with fibs..gann cujo, its either your stupid or...

re: cmc 5 minute with fibs..gann cujo, its either your stupid or I can't explain it clear enough to you. Perhaps this will enlighten you:

http://www.treasury.gov.au/documents/1156/RTF/03_ABE_Speech.rtf


NOTE:

The reduction in real wages is a standard Stolper?Samuelson result. Even so, it might strike some of you as a bit odd. An intuitive explanation is as follows: Starting from a position in which labour and capital are fully employed, the output of the more capital?intensive sector expands, and the output of the other sector contracts. Suppose this were to happen with no change in the capital intensity of production in either sector. Then the expanding sector would be requiring additional factor inputs in a higher proportion of capital to labour than they would be released from the contracting sector. The only way this can happen is if labour becomes unemployed; that is, if some of the labour released from the labour?intensive sector is not re?employed in the expanding capital?intensive sector. A real wage reduction ensures that labour remains fully employed. It achieves