The TUC published this graph yesterday:
What it shows is how much the average worker has lost because wages have not kept up with growth over the last thirty years.
The "missing income" went to profits and investment returns, of course.
The trouble was with profits concentrated in very few hands and wages widely spread people couldn't afford to buy the products that were being made without borrowing back the wages they'd lost from the people who's taken them from them with the result that debt skyrocketed and recession followed.
And the tax take fell too as profits are taxed less than wages.
The result, austerity?
So that's it in a nutshell: the recession was caused by not paying people enough for what they did. Which makes the answer very obvious.....
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“not being people enough”?
Do you mean “not paying people enough?”
Edited
Thanks!
A lesson learned again. Henry Ford realised that his workers and other working people must be paid enough in order to buy his cars. In recent times most car sales have been attached to loan or leasing agreements and this is where the profit is made.
Keep up the good work Richard at the TUC.
It might interest you to know that Timmy W is foaming at the mouth and has resorted to using the F word, because Brendan Barber dares to express post-Keynesian ideas..
http://timworstall.com/2012/09/11/ignorant-fucking-stupidity-from-the-tuc/ (sorry you may have to edit this!)
Now of course support for Brendan Barber’s comments about the Financial Sector do of course come from economists such as Steve Keen who blame the diversion of investment away from the productive side of the economy into Ponzi style speculation.
All the best
Amusingly the wi-fi I am working from censors Worstall as “adult content”
Clearly not referring to his economics or thinking, are they?
I note the comment that “missing income” went to profits and investment returns, but do we know how many of these “profits and investment returns” were received by UK pension funds? My understanding is that the largest investors in the UK stock market is pension funds, so it would be useful to know.
7% of UK stock market is owned by UK pension funds right now
[…] My core theme is that austerity is the wrong reaction to the crisis we’re in. I explained, in part, why this was the case yesterday. […]
[…] Â […]
Considering that Brendan Barber has just retired from his position on the Court of Directors of BoE (June 2012), it is reasonable to assume that he has first-hand knowledge of our financial position.