Just got my daughter's slumber party to actually go to sleep....
Here's why I post...
http://anticap.files.wordpress.com/2010/11/fig2_prodhhincome.jpg
and
What Happened to the Wage and Productivity Link?
To summarize the graphs, productivity has more than DOUBLED in the past 40 years, while wages have remained FLAT.
There are a lot of contributing factors, but an undeniable fact is that in the period between 1945 and 1970, growth in productivity was MATCHED by a growth in real income. EVERYONE prospered, shareholders and employees alike, and they did so EQUALLY.
That has changed and shows no signs of reversing. If the growth in employee productivity was MATCHED by a growth in wages, the average US worker would be taking home DOUBLE what they are now.
Something happened back around 1970 and has continued...
Out of the second link:
1. Increasing use of robotics in manufacturing (less need for skilled human labor)
2. Nixon's ending of the gold standard (had to be done in my opinion)
3. Globalization (H. Ross Perot's "Giant sucking sound")
4. The collapse of Labor Unions
5. Rise of dual income households (a consequence of the previous 4 items).
There is nothing really that can be done about the first item (robotics and computerization). These had dramatic increases in productivity which didn't require similar increases in worker skill.
The Couriers of Express are about to be hit by this whammy - use of computerization that makes their skill set obsolete. And there are still doubters out there...
Gold standard had to end - there just isn't enough gold in the world to match up with the growth of economic output. If gold was being 'found' at the same rate as worldwide economies were growing, then the gold standard could've been maintained. It wasn't, so it couldn't be maintained.
Globalization has aided developing countries, but has devastated the manufacturing base of developed countries. Manufacturing was sent overseas, goods were imported along with unemployment, thus causing a decline in the equilibrium wage rate in developed countries (wage stagnation while productivity continues to increase).
The collapse of labor unions is obvious, and a restoration of balance between corporations and labor unions is part of the solution to the problem.
#'s 1, 2 and 5, there is nothing that can change that.
For globalization, a realization that 'free trade' is a misnomer, and that trade much like other things in macroeconomics, needs to be regulated to protect the employment markets of the citizens within developed nations - EVEN IF it results in price rises in certain goods. The resulting increase in prices of certain manufactured goods would more than be made up by the increase in average wage rate, increase in tax revenue, decrease in unemployment, decline in population needing government assistance, increasing investment WITHIN developed nations to 'get around' high tariffs on certain goods, thus providing more jobs within developed nations, thus providing more tax revenue, narrowing the deficit, and on and on.
To put it bluntly, buying cheap goods from China is KILLING us and we are paying the price for it. In addition, a welfare state CANNOT exist with 'free trade'. One or the other has to go, or the economy eventually collapses (Europe is in the early stages of this).
Finally, the need for labor unions to reestablish balance between the interests of shareholders and employees is part of the solution to the mismatch between productivity and wages.
Somewhere, somehow, those that work for a wage are going to need to do something about their compensation not keeping pace with their increasing productivity. They only have one real, direct option - to ORGANIZE.
Outside that, the electorate will need to come to a 'collective realization' (despite what the hero thinks, collective action DOESN'T equate to communism) that either free trade or the welfare state will have to go - they both can't exist side by side. Since there is no sign that people want the welfare state to go away, that leaves 'free trade'. In addition, open borders can't co-exist with a welfare state and not have what is happening in Europe happen here. One or the other has to go. Eventually, the borders will have to be secured - the collective electorate will eventually realize that and vote accordingly.
Some take up the cause of trying to save the whales, some try to free Tibet. I'm just trying to get the Couriers of Express to get off their butts and organize. That is my 'lost cause'.