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Martin L. Weitzman, one of America's leading economic theorists, has hit upon a central feature of our economic life as the cause of staflaction: the standard practice of paying workers a fixed wage, regardless of whether a company is doing well or poorly. Weitzman shows why an alternative labor payment system, in which a significant number of firms share profits revenues with their employees, provides immunity against stagflation by automatically soaking up unemployed labor and resisting inflation.
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