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> increases in median worker productivity slowed > fewer and fewer people are needed to make more and more stuff. You're arguing against yourself, here. The

> increases in median worker productivity slowed > fewer and fewer people are needed to make more and more stuff. You're arguing against yourself, here. The latter is productivity increase, the former is productivity decrease. Also, productivity growth is not new, it has been going on as long as the economy exists. Machine automation has been occurring since the industrial revolution started, it did not start in 1973. What started in 1973 was that the high end (basically, the owners of capital) stopped sharing productivity gains - meaning that where previously, workers were able to bargain for a share of the increase, now they cannot, because of various mechanisms of taking. CEO pay did not go up 10X because CEOs were suddenly drinking tiger blood and winning the Fields medal. My original contention was that one of these was the shift away from the Bretton Woods system, with fixed currency exchange rates based on the dollar; going from here to speculative international currency flows and floating exchange rates is one possible mechanism for making workers less able to bargain for those productivity increases.

harryh 10y ago
What started in 1973 was that the high end (basically, the owners of capital) stopped sharing productivity gains - meaning that where previously, workers were able to bargain for a share of the increase, now they cannot, because of various mechanisms of taking. NO! This is EXACTLY what I (really Scott Summers) am saying has not happened. The share of national income going to labor (vs the owners of capital) has remained almost exactly constant since 1973 (and before then as well).
- astazangasta 10y ago
  I already commented on this; his assumption is that the PCE is "correct" and the CPI is "wrong". I made a criticism of PCE that you did not address; it is merely counting increased health care spending (a significant mechanism of wealth transfer) as "labor share" of national income.
  - harryh 10y ago
    That is not his assumption: This is not one of those “he said, she said” where reasonable people can disagree on whether the PCE or CPI is a better price index. This is a pay/productivity gap being invented by using the slowly moving price index (NDP, which is similar to the PCE) to make worker productivity look better, and the faster moving price index (CPI) to make real wages look lower. That’s not kosher. You need to use the same type of index for both lines on the graph.
    - astazangasta 10y ago
      There is no difference between using NDP and GDP; the shift emerges only when you switch between PCE and CPI. It is totally about whether the PCE or the CPI is a better index. We can see this clearly enough from the fact that there is a notch in the graph one way and not the other. If you simply don't believe in wage stagnation, then I'm not sure what this whole conversation has been about.
      - harryh 10y ago
        Wage stagnation is definitely a thing, but it's due to increasing wage inequality between different employees not due to capital grabbing an increasing share of national income. Labor's share is remarkably stable over time: http://taxfoundation.org/sites/taxfoundation.org/files/docs/FF467_charts_5.png http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
        astazangasta 10y ago
        Getting hard to find this thread again, but I've been enjoying this exchange... While that graph shows labor's share as stable, many others do not, e.g. in this piece by Jared Bernstein: http://economix.blogs.nytimes.com/2013/09/09/why-labors-share-of-income-is-falling/ http://economix.blogs.nytimes.com/2013/09/09/why-labors-shar... Of particular interest to me is that if you look at the BEA numbers, they split 'labor share' into wages and non-wage compensation (benefits, SS, medicare, etc.) - the latter share has climbed over time to 20%, meaning much of the stability in the "wage share" is just increasing money being paid to Medicare. It's not clear what's being measured and not in that chart, but, for example, this St. Louis Fed data shows both an increasing Dividend share of GDP and a declining wage share of GDP: http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-dividends-and-wages-as-percent-of-gdp-since-the-1940s/ http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-divi...

harryh 10y ago

What started in 1973 was that the high end (basically, the owners of capital) stopped sharing productivity gains - meaning that where previously, workers were able to bargain for a share of the increase, now they cannot, because of various mechanisms of taking. NO! This is EXACTLY what I (really Scott Summers) am saying has not happened. The share of national income going to labor (vs the owners of capital) has remained almost exactly constant since 1973 (and before then as well).

astazangasta 10y ago
I already commented on this; his assumption is that the PCE is "correct" and the CPI is "wrong". I made a criticism of PCE that you did not address; it is merely counting increased health care spending (a significant mechanism of wealth transfer) as "labor share" of national income.
- harryh 10y ago
  That is not his assumption: This is not one of those “he said, she said” where reasonable people can disagree on whether the PCE or CPI is a better price index. This is a pay/productivity gap being invented by using the slowly moving price index (NDP, which is similar to the PCE) to make worker productivity look better, and the faster moving price index (CPI) to make real wages look lower. That’s not kosher. You need to use the same type of index for both lines on the graph.
  - astazangasta 10y ago
    There is no difference between using NDP and GDP; the shift emerges only when you switch between PCE and CPI. It is totally about whether the PCE or the CPI is a better index. We can see this clearly enough from the fact that there is a notch in the graph one way and not the other. If you simply don't believe in wage stagnation, then I'm not sure what this whole conversation has been about.
    - harryh 10y ago
      Wage stagnation is definitely a thing, but it's due to increasing wage inequality between different employees not due to capital grabbing an increasing share of national income. Labor's share is remarkably stable over time: http://taxfoundation.org/sites/taxfoundation.org/files/docs/FF467_charts_5.png http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
      - astazangasta 10y ago
        Getting hard to find this thread again, but I've been enjoying this exchange... While that graph shows labor's share as stable, many others do not, e.g. in this piece by Jared Bernstein: http://economix.blogs.nytimes.com/2013/09/09/why-labors-share-of-income-is-falling/ http://economix.blogs.nytimes.com/2013/09/09/why-labors-shar... Of particular interest to me is that if you look at the BEA numbers, they split 'labor share' into wages and non-wage compensation (benefits, SS, medicare, etc.) - the latter share has climbed over time to 20%, meaning much of the stability in the "wage share" is just increasing money being paid to Medicare. It's not clear what's being measured and not in that chart, but, for example, this St. Louis Fed data shows both an increasing Dividend share of GDP and a declining wage share of GDP: http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-dividends-and-wages-as-percent-of-gdp-since-the-1940s/ http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-divi...