Centuries ago, the majority of people had very little disposable income. The industrial revolution changed all of that. People became much more productive. There was more money circulating. Over time sales were done more and more by companies / corporations and less and less by artisans.
Today, most production and sales is done by corporations. Because of monopoly power, more and more goods are sold for a price that is FAR above cost. The excess profits are invested in more production rather than in wages.
After WW II, the U.S. had 3 % of the population and 50 % of the world's manufacturing capacity. We saved a lot of money from doing a lot of production.
As we went into the 70s, the world had rebuilt much of it's productive capacity. By 1971, wages had stagnated. Our productivity is / was growing like crazy. From '45 to '71, the economy had grown from necessities stuff to include a huge market for gadgets. The consumer economy consisting of necessities and gadgets comprised 72 % of the total economic consumption.
Since wages were stagnant, the gadget part was diminishing. To keep the consumer economy powered-up in the face of stagnant wages, cheap credit was force-fed to the system.
Foreign competition gave us gadgets at a lower price but diminished our employment. GOV came to the rescue with GOV-borrowing$ to give lots of GOV jobs,,, on credit. We bought gadgets on private credit and many people bought gadgets with earnings paid for with public credit.
The corporations were making huge profits and banking them rather than paying higher wages. We maintained gadget consumption with credit. The corporations plowed more money into gadget making for us consumers. Since the corporations put their excess earnings into instruments rather than into wages, our consumptive power was steadily falling. Credit has crashed and gadget consumption is falling off. The consumption spiral causes a production spiral,,, self-reinforcing.
Our productivity went way up but, we couldn't afford the gadgets. Wages were / are fixed but, inflation is diminishing our purchasing power.
http://news.bbc.co.uk/2/hi/africa/5303590.stm#graph
Our standard of living was falling but, propped up by credit. Wages are actually diminishing.
The workforce participation is falling. Wages are falling. Inflation is rising,,, 30 % in some areas. The consumer economy is dying. We will buy necessities, not gadgets.
The owners of capital have reaped all the gains. The workers have not participated. The workers can no longer carry their previous part of the consuming economy.
"Historically, the gains from productivity have been shared between the owners of capital and the workers. However, over the last decade or so almost all the gains have gone to capital"
http://www.stockbloghub.com/2010/03/04/ ... ving/29787
All the info shows the rich getting much richer.
The rich can't very well arbitrarily raise all the wages. We would be non-competitive in the global market.
One must remember that most of the wealth held by the very rich is held as
INSTRUMENTS. The world GDP is $ 50 trillion. Just the contracts denominated in dollars amount to $ 1.2 quadrillion dollars. This is an old number but, you get the idea. There are probably 10 quadrillion worth of contracts. The instruments can NEVER convert to tangibles.
So, the rich are holding $ 10 quadrillion worth of
DEBT contracts. Eventually, the world can produce $ 10 quadrillion worth of consumables. The wealth is steadily draining away to the top 3 % of the wealthy. In the current situation, there will never be $10 Quadrillion worth of consumption.
Without consumptive power, the economy will revert to an economy of necessities.
We aren't remunerated for our vastly increasing productivity so, our aggregate productivity will fall until it is commensurate with our consumption.
GOV tries to juice up consumption with the destructiveness / consumption of war. It's all paid for with taxes on the seriously diminishing number of producers. GOV, in it's foolishness sees war as a way to gas the producing economy. It's false productivity paid for with false wealth to accomplish false [useless] consumption.
Our uber-efficiency has led / forced us to print illusions of wealth. History says that it will all come crashing down. Most of the wealthy will crash too.
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
