{"id":25366,"date":"2017-09-08T06:52:46","date_gmt":"2017-09-08T11:52:46","guid":{"rendered":"http:\/\/olduvai.ca\/?p=25366"},"modified":"2017-09-08T06:52:46","modified_gmt":"2017-09-08T11:52:46","slug":"the-real-reason-wages-have-stagnated-our-economy-is-optimized-for-financialization","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=25366","title":{"rendered":"The Real Reason Wages Have Stagnated: Our Economy is Optimized for Financialization"},"content":{"rendered":"<p><a href=\"http:\/\/www.oftwominds.com\/blogsept17\/financialization-wages9-17.html\" target=\"resource\"><b>The Real Reason Wages Have Stagnated: Our Economy is Optimized for Financialization<\/b><\/a><\/p>\n<p><i>Labor&#8217;s share of the national income is in freefall as a direct result of the optimization of financialization.<\/i><\/p>\n<p><b>The Achilles Heel of our socio-economic system is the secular stagnation of earned income, i.e. wages and salaries.<\/b> Stagnating wages undermine every aspect of our economy: consumption, credit, taxation and perhaps most importantly, the unspoken <i>social contract<\/i> that the benefits of productivity and increasing wealth will be distributed widely, if not fairly.<\/p>\n<p><b>This chart shows that labor&#8217;s declining share of the national income is not a recent problem, but a 45-year trend:<\/b> despite occasional counter-trend blips, labor (that is, earnings from labor\/ employment) has seen its share of the economy plummet regardless of the political or economic environment.<\/p>\n<p><img decoding=\"async\" class=\"wide\" src=\"http:\/\/www.oftwominds.com\/photos2015\/wages-GDP9-15.png\" width=\"550\" align=\"center\" border=\"0\" \/><\/p>\n<p><b>Given the gravity of the consequences of this trend, mainstream economists have been struggling to explain it, as a means of eventually reversing it.<\/b> The explanations include automation, globalization\/ offshoring, the high cost of housing, a decline of corporate competition (i.e. the dominance of cartels and quasi-monopolies), a failure of our educational complex to keep pace, stagnating gains in productivity, and so on.<\/p>\n<p>Each of these dynamics may well exacerbate the trend, but they all dodge the dominant driver of wage stagnation and rise income-wealth inequality: <b>our economy is optimized for financialization, not labor\/earned income.<\/b><\/p>\n<p>What does <i>our economy is optimized for financialization<\/i> mean? It means that <b><i>capital and profits flow to the scarcities created by asymmetric access to information, leverage and cheap credit<\/i>&#8211;the engines of financialization.<\/b><\/p>\n<p><b>Optimization is a complex overlay of dynamically linked systems:<\/b> the central bank optimizes the flow of cheap credit to the banking\/financial sector, the central state tacitly approves the consolidation of cartels and quasi-monopolies, and gives monstrous tax breaks to corporations even as it jacks up taxes and fees on wage earners and small business.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Real Reason Wages Have Stagnated: Our Economy is Optimized for Financialization Labor&#8217;s share of the national income is in freefall as a direct result of the optimization of financialization. The Achilles Heel of our socio-economic system is the secular stagnation of earned income, i.e. wages and salaries. Stagnating wages undermine every aspect of our [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[127,1573,587,8468],"class_list":["post-25366","post","type-post","status-publish","format-standard","hentry","category-economics","tag-charles-hugh-smith","tag-financialization","tag-of-two-minds","tag-wage-stagnation"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/25366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=25366"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/25366\/revisions"}],"predecessor-version":[{"id":25367,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/25366\/revisions\/25367"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=25366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=25366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=25366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}