A tweet by Danny Blanchflower drew my attention to a November article by the Washington DC correspondent of The Economist. The article carried the same title as this post and in it he argued that whilst it appeared that the US economy was recovering there was nothing normal about the way in which it was doing so. There were good reasons for that, he argued, of which this one stood out:
Rapid growth in wages is unlikely, for three reasons. First, falling union membership and global competition have left workers in a weaker bargaining position than ever before. Labour's share of national income is hovering around 63%; at the turn of the millennium it exceeded 70%. Even in a tight labour market, workers will find it hard to negotiate big pay rises. Second, labour-market participation remains low, meaning some workers can probably be tempted back into the workforce before wage growth takes off.
The data is slightly different in the UK, and the fall in the Labour share is longer term, but the overall trend is not dissimilar, and the reasoning is entirely the same.
So whatever recovery we have has not benefitted most people, and many remain proportional to the economy as a whole worse off.
No wonder there was no need for an interest rate rise in the US.
And that there is no need for such an increase here.
But equally, there is also no surprise that there are calls for more curbs on unethical behaviour by companies.
And for a wealth tax.
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Surely this quote (in the Touchstone Document):
““I believe that the economics profession and the
policy community have downplayed inequality for
too long … Now all of us have a better understanding
that a more equal distribution of income allows for
more economic stability, more sustained economic
growth, and healthier societies.”
Christine Lagarde, Head of IMF, 25 January, 2013 ”
can’t be taken without assuming gross disimulation? The ex-finance Minister of the Sarkozy Government and then the IMF who have advanced the rape and pillage of economies?
Couldn’t Howard Reed have found something that doesn’t ring like a cracked bell?
One has to believe in the possibility of minds being changed
All progress depends upon it
Simon
Do you have a reference and/or link for that quote and document? I would dearly like to use it for something that I am working on at the moment.
Oops,
It seems that I wasn’t paying close attention to the links that Richard provided here. To make it perfectly easy for those who are closely interested, the relevant quote (and an interesting array of comparable quotes) are on pages 25 & 26 here:
https://www.tuc.org.uk/sites/default/files/tucfiles/How%20to%20Boost%20the%20Wage%20Share.pdf
In the context of this particular post the TUC Touchstone Pamphlet also makes this noteworthy observation:
“the levels of inequality of recent times have simultaneously intensified the concentration of power, and helped to turn the US and the UK into what the giant American financial corporation, Citibank, has dubbed (in a series of classified but subsequently leaked memos) ‘plutonomies’, ‘where economic growth is powered by and largely consumed by the wealthy few’ (Kapur, 2005, 2006). One of the key effects of this development has been that the American economy now depends more on the sales of ‘toys for the wealthy’ than the needs of the ‘non-rich’ and their ‘surprisingly small bites of the national pie’.”
In which case it is little wonder that that this slow and fragile upturn is no ordinary recovery or that it is scarcely a recovery at all.
I hope that Baxter and the ‘real people’ he bangs on about have read this because this is exactly what the real people I know have been experiencing too.
This underlines the fact that once again there has been an enormous transfer of wealth from the 95% to the top 5%.
New High Pay Centre report: Executive pay continues to climb at expense of ordinary workers
FTSE CEO Pay jumped to £4.964 million in 2014
FTSE 100 CEO Pay climbed to £4.964 million in 2014
CEOs now paid approximately 183 times the average UK worker
Top pay up significantly from £4.129 million in 2010
Findings will create pressure for further action to reduce gap between the super rich and low and middle-income earners
FTSE 100 CEO pay jumped to £4.964 million in 2014 according to a new report published today by the High Pay Centre think-tank.
The figures represent a slight increase on CEO pay of £4.923 million in 2013, but a more drastic rise from the £4.129 million average in 2010.
See:http://highpaycentre.org/pubs/new-high-pay-centre-report-executive-pay-continues-to-climb-at-expense-of-o