Questions for DeLong

>what's wrong with this argument?

Employers *are* more likely (than employees) to put the money under their mattress.

Perhaps not literally. But actually/practically.

Employers spend a smaller percentage of marginal earnings on immediate consumption (which would increase short-term AD).

We know that for a fact, don't we? Theory obviously suggests it, but I've never looked up the studies.

If what you really mean is "use the money valuably," employers also (as a group) invest more of their holdings in wall-street lottery "innovations," which (if you agree with Volcker, Buffett, Bogle, Zandi, and a zillion others) don't build the capital base or even improve market efficiency much if at all.

So it strikes me that there are at least two serious things wrong with that argument.

I'm confused.

I thought Keynesians (new, neo, paleo, etc.) believed that, due to downward price and wage stickiness, we get quantity adjustments in a recession, i.e., falling output and rising unemployment. But, once we're in the recession, the argument seems to be that the quantity adjustments would be even bigger if prices/wages weren't sticky(!).

To sum up, their position seems to be "bad things happen because markets don't equilibrate but thank god they don't because then where we would be!".