In a post he says that the process produces equilibrium regarding employer behavior in cutting wage costs in reference to Leonhardt's NYT article cutting health care costs by employers. It is true that an employer can gain a near term advantage in cutting employee health care costs and the advantage goes away in equilibrium.
But the economy does not wait for other firms to act for equilibrium to occur. The economy waits for industry to discover the slight advantage. Then the process of coherence takes over and the expectation changes the yield from employment before the other employers act. It works because of information flow.
Knowledge of the future compensation travels first before actual industry compensation adjusts. It is a important distinction to distinguish between scalar instants and the vector world of reality. The vector world of choices get orthongalized into temporal changes in preference much faster than industry adjustments.
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