What would happen if all Americans suddenly got a 50% pay cut?

I'm writing this post to fortify the argument that Libertarians are Anti-American... http://www.huffingtonpost.com/ian-fletcher/libertarianism-the-new-an_b_811271.html Cato/Hayek uber-Professor writes: "Why should you or I celebrate less an improvement in the welfare of a South Korean than we celebrate a comparable improvement in the welfare of a South Carolinian?" I can answer that question effectively because I am a practical patriot. But first explore this hypothetical: Suddenly all American salaries are cut by 50%. What would happen? 1) Corporations with high human resources costs (which is most of them) would see their costs fall massively & immediately. Previous profit margins of a few percent would therefore skyrocket (think of an industrial maid service where HR costs are over 70% of their total costs - if price stayed the same the previously thin profit margin might more than triple). Companies that furnish "luxuries for the common man" (lower-level steakhouses etc.) would get hurt the fastest as Americans scramble to reduce their overhead costs (q.v. all the Sizzler closings during the recent recession). 2) Since modern Americans generally don't change their buying behavior quickly they will likely run-up debt attempting to maintain as much of their recent lifestyle as they can. So corporate revenues would drop but not as fast as costs. 3) Corporations (with their massively lower costs and moderately lower prices & sales) would have a spike in profitability. A short-sighted Republican might cheer - "Good for American Business. Let's do it!" But then the deflation nightmare would set in... 4) Companies with their lower human resources costs would cut their prices to increase or maintain sales. Then with prices falling most Americans will delay purchases in the savvy hopes of getting it cheaper in the future. Spending dries up and the economy stagnates or spirals worse. People can't afford their mortgages (way worse than today) and the real estate market plummets. Wealthy foreigners come in and buy up our land/property & goods at fire-sale dirt-cheap prices. We can't ramp up exports by a counterbalancing amount because other countries have import restrictions to protect their local businesses. We would lose everything. EVERYBODY IN AMERICA WOULD BE WORSE OFF. Now explore the opposite extreme hypothetical. Inflation, as bad as it can be, still is better than deflation. Inflation encourages spending & investment because money just sitting around loses value. It amazes me that Republicans consistently WANT Americans to earn lower wages. Republicans do everything they can to exacerbate income inequality, rationalize outsourcing and restrict the freedom of people to unite & counterbalance corporate hegemony. All of those actions may temporarily increase the profitability of companies that merely claim to be America but might as well be foreign companies for all the good they do for actual American citizens. But in the medium AND long run such actions are terrible for the American people. How does an "American company" better serve American citizens any more than a "Foreign company" if both conduct similar operations in America? Republicans & Libertarians will give a very different answer than I will. What is the difference between "foreign oil" vs. "American oil" if both will always sell it to the highest bidder? Who cares if Chevron, Exxon etc. control the oil if they don't pay taxes and will sell it to the Chinese if they're willing to pay a penny more than the Americans? I ask my Republican & Libertarian friends this: How is an American-owned company that does business in America any better than if it were Foreign-owned? As soon as you gleefully admit "no better" (as Cato/Hayek zealots do) you have conceded that increasing profitability of American-owned companies at the expense of American citizens' income is terrible for America.  For it is a perverse system of measurement that validates policies which make American companies richer while making American citizens poorer. Now look at the income inequality trends and tell me that "the pay cut" isn't happening while more & more goes to the top tiniest fraction of one percent. http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph http://assets.motherjones.com/politics/2011/inequality-page25_actualdistribwithlegend.png Just how much more overwhelming evidence will you need before you ultimately reject "supply-side" absurdities? Or are you just as zealous and impervious to facts when it comes to economics as you are about faith or science?