After 1973, and especially after the early 1980s, productivity gains went towards the 1%. Media male compensation in particular went flatline... (emphases mine)
Larry Mishel has a systematic breakdown of the reasons for worker income stagnation since 1973. He starts with the familiar divergence: productivity up 80 percent, the compensation (including benefits) of the median worker up only 11 percent. Where did the productivity go?
The answer is, it’s two-thirds the inequality, stupid. One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.
... Income stagnation does not reflect overall economic stagnation; the incomes of typical workers would be 30 or 40 percent higher than they are if inequality hadn’t soared.
Happily, Krugman doesn't say whether this is "fair" or "just". Those are meaningless words. Obviously one man's fair is another's unfair. No laws need be broken, though many may be bent. Purchasing politicians may speed the inequality process, but even that is probably not essential.
The interesting questions are
- Why did this happen in the late 1970s? What changed? How much of this is a result of computerization, automation, and globalization?
- Is this good?
- Is this wise?
- Should we do anything about it? If so, what should we do?
My answers are
- It is technology and globalization, and large corporations changing the ecology of accounting and regulation to perpetuate themselves.
- It is not good.
- It is not wise. This is a recipe for social collapse.
- We should do something. We should tax carbon. We should tax financial transactions. We should institute industrial policies that provide employment to the bottom 60%. We should expect to subsidize employment for the mass disabled of the information age. We should prepare for the AI age.
Your answers may vary.
- Slavery, technology, and the future of the weak 2/2012
- Life in the post-AI world. What's next? 9/2011
- The AI Age: Siri and Me 11/2011 (Shortly after I wrote this Siri stopped being useful. Coincidence :-)?)
- Mass disability goes mainstream: disequilibria and RCIIT 11/2011
- Attacking Inequality: Redistributing wealth 9/2006
- Opposition to redistribution - two causes 9/2011 - why income subsidies must be invisible
- Occupy Wall Street (OWS): the mass mind masticates 10/2011
- Where has the money gone? To the very American oligarchy. 2/2006
- The Quiet Coup - Atlantic Mobile 5/2009 - Simon Johnson. How America's de facto oligarchs came to emulate Russia's. I missed this one three years ago; it's a classic that deserves a post of its own.
- My Favorite Paul Krugman Essay: Brad DeLong (DeLong on Krugman 1998)