Tuesday, August 16, 2016

Here's Why Wages Have Stagnated--
& Will Continue to Stagnate
"Mainstream economists are mystified why wages/salaries are still stagnant after 7+ years of growth / 'recovery.' The conventional view is that wages should be rising as the labor market tightens (i.e. the unemployment rate is low) and demand for workers increases in an expanding economy. But wages are only rising significantly for the top 5%, while workers between the bottom 81% who have seen their household incomes decline and the top 5% are experiencing stagnant earnings. We can see how the top 5% have pulled away from the bottom 95% by examining household budgets: spending by the top 5% has soared compared to the stagnant spending of the bottom 95% .. The key feature of monopoly and state-cartel capitalism is ever-rising costs for everything controlled by monopolies, cartels or the state. Since these are the dominant structures in our economy, the cost basis of the entire economy rises even though output doesn't rise. In other words, we pay more for the same goods and services. Conventional economists may have an abstract understanding of business costs and regulatory burdens, but they have no life experience in actually earning a profit in a high-cost, state-cartel-dominated, globalized marketplace .. The only way to reverse declines in labor participation and stagnation in wages is to make it easier to start enterprises and hire people, and dramatically lower the cost basis of the entire economy. There is scant evidence that policymakers have any real interest in either of these goals or any knowledge of how to make them happen, despite the abundance of lip-service paid to 'business-friendly' strategies."
- Charles Hugh Smith*
link here to the essay

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