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Just like QE and the bush tax cuts, this would merely be a band-aid. They even covered the major problem earlier in the article... and then completely ignored i
by brational 13y ago
Just like QE and the bush tax cuts, this would merely be a band-aid. They even covered the major problem earlier in the article... and then completely ignored it when offering solutions.
>Starting in the ’80s, productivity gains were no longer shared with workers. Therefore, the wage share of the economy began to decrease. As a percentage of total output, wages have fallen from a high of almost 52 percent around 1970 to less than 43 percent today (see Graph 1). Meanwhile, inequality within wages also increased. The upshot? The rich began capturing nearly all the results of economic growth—the top 1 percent’s share of national income increased from about 8 percent in the mid-’70s to about 23 percent today....they “save” by buying financial assets—which means that most of the fruits of economic growth have been channeled into asset price increases, rather than consumer price inflation.
If you just give everyone more money to increase AD via QE, tax cuts, free income or whatever else... it all gets spent and where do the increased sales and profits go? You just stay in the same cycle and have to continue sending more fed checks.
It's the same reason minimum wages don't work. Setting a lower bound does nothing when an upper bound doesn't exist.
- bronbron 13y ago> Starting in the ’80s, productivity gains were no longer shared with workers. Has anyone really looked into why this is? It's easy to say 'lol greed' and be done with it, but it seems silly to presume that people were any less greedy in the 60's and 70's. 'Globalization' might make a little bit of sense as to why individual companies might pay relatively less taxes to the US government, but I'd need more context than that before I'd be willing to accept globalization as the answer to why production gains aren't really being shared with workers anymore. If the answer is that collective bargaining has been getting less and less effective over time, why is that?
- lsiebert 13y agoThe decrease in manufacturing jobs and union power was a part of it. The failure to raise a minimum wage another part.
- munificent 13y ago> If the answer is that collective bargaining has been getting less and less effective over time, why is that? I know virtually nothing about this area, but I'd guess that the country transitioning from a manufacturing economy with a strong union presence to a service economy where unions are not strong has something to do with it. Increases job mobility probably doesn't help either. My impression is that my parent's generation felt they would work at the same company for decades. When you have that mindset, your coworkers are an important community for you and things like unions are worth the effort. When everyone switches jobs every couple of years, if you aren't happy, instead of collectively organizing and fixing the problem, you just leave for greener pastures. Of course, it's an illusion because the end result is that those pastures are usually the same, but I think that's part of how we got here.
- Zigurd 13y agoThe answer is likely to be spread over a number of areas, collective bargaining being only one, and globalization of the labor market another, where wealth has gained power versus workers. So the answer is "greed," but not more greed, as you say. Just stronger, more sophisticated, and more effective greed. Which is a distinction that might be lost on both sides for different reasons.
- evolve2k 13y agoActually we're the problem. The 1980's represented the rise of the computer age and a massive acceleration in automated production. The trend is long term and shows no sign of stopping. TLDR; As computers replace manual labor the boss pays less out less of his profits for labor and we have an economy where the rich get richer. Once upon a time profit growth equated to wage growth but modern computer technology has changed this.
- toomuchtodo 13y ago> If you just give everyone more money to increase AD via QE, tax cuts, free income or whatever else... it all gets spent and where do the increased sales and profits go? You just stay in the same cycle and have to continue sending more fed checks. What if the Fed directly purchased income producing assets (utilities, securities of companies on the S&P 500, etc) and used the proceeds to fund a basic income?
- nawitus 13y ago>If you just give everyone more money Basic income can be a cost neutral, effective form of social security.