&gt;You don&#x27;t seem to know what Keynesian economics is.<p>I&#x27;m <i>really</i> not the one who is confused here :)<p>&gt;If you think I&#x27;m wrong, please show how to use a Keynesian theory to predict &quot;real wages fell by 40% but employment dropped&quot;. Good luck.<p>Simple. Reduce aggregate demand enough (e.g. by slashing government spending like Greece has done) and employment and real wages will both drop.<p>It&#x27;s neoclassical economics with its idiotic presumption of &#x27;full employment by default&#x27; that can&#x27;t account for real wages and employment dropping at the same time. According to that theory, wages will just keep dropping until everybody is employed.