My understanding is altogether biased towards the personal and emotional. I am influenced by the ideas behind "Gross National Happiness" and similar harder-to-quantify measures. I've read first person accounts of people during the Great Depression. (Eg, Studs Turkel's "Hard Times"). There were no jobs for some people. Any analysis which says "Unemployment is .. a mismatch between employee's desired wages and market wages" must be wrong, or at least simplified, because it assumes either that there is a market for jobs, or that the market wages are enough for basic survival.

For "basic survival" I mean "under our cultural expectations." I don't want the US to be 80% Hoovervilles, even if that does get us to near full employment. That's the extreme conclusion, but is it not fully justified by that simplified analysis?

I am quite of the view that we should first decide what we want to get from our economy, and adjust the market rules to improve the changes of reaching that goal and to minimize the changes of catastrophe.

My observation is that people want security, expressed monetarily as reduced personal or family risk. Sticky wages reduce risk. Health insurance reduces risk. Protection from capricious management decisions reduces risk. Higher wages reduce risk by being able to build up a larger savings, though in practice few do that so this isn't all that secure. I believe the risk issue here is analogous to the Gamblers Ruin, in that people with low income and low savings are more at risk to statistical fluctuations which can expose them to greatly reduced living conditions.

Then, as a moral question, how do we use Keynesian economics (or any other economics model) to reduce the risk? We can have legal systems to review contract violations, we can have wage freezes (both up and down), we can have increased worker protections, etc.

Okay, so the Keynesian model says that this increases unemployment. So what? One response is that we shouldn't have these restraints on the market. Another response is that we have increased government support, to minimize the sharp edges of being unemployed. A third is that we look to the churches, or other NGOs, to provide the social safety net, and a fourth is to look toward unions or unemployment insurance. A fifth says to look towards extended families and friends.

The Keynesian model says nothing about the morality of the choice. It only suggests the likely consequences.

"Your theory yields no reason an employee can't do the same thing."

I didn't say they couldn't. I was elaborating on why an employee couldn't easily quit and move to another job. Stories abound about people using their employment position to get special perks. I got basement parking for one job, with the management cars, rather than parking with the rest of the employees in the lot 3 blocks away because I complained and because I wasn't trivially replaceable. Then again, I complained because management decided to move the company to a place further from where I lived, and I had no part in that decision. So it's a complicated issue.

But my theory says that I have less power over the company than they have over me, because I am closer to living out of my car, should my personal decision to quit prove disastrous, than the company is in going bankrupt because they decided to fire me.