It never ceases to amaze me how, either because they are intentionally trying to mislead people or because they are just dumb/incompetent, "analysts" or public commentators and/or politicians profess to be flummoxed by the weak economy, the stop-and-go nature of growth and economic activity. Well, this isn't rocket science: when you have an economy powered mostly by consumer spending and people don't have money to spend, shit won't get bought...is this not obvious? And that's the message--the correct one--being delivered this week to the G20.
The G20 labor ministers are meeting this week in Melbourne, Australia (the G20 leader summit is in Brisbane in November). Coming into the meeting, the International Trade Union Confederation has put out this report with the very sexy and inviting title, "The Case for a Coordinated Policy Mix of Wage-led Recovery and Public Investment in the G20"...I'm fanning myself to cool it down.
The top-level point:
“A coordinated mix of polices in the G20 targeted to increase the share of wages in GDP by 1%-5% in the next 5 years and to raise public investment in social and
physical infrastructure by 1% of GDP in each country can create up to 5.84% more
growth in G20 countries – compared to business as usual.
And:
”A 1%-point increase in the wage share at global level could lead to a 0.36 % increase in the rate of growth in global GDP above the current trajectory. This shows that growth in the world economy on aggregate is “wage-led”.
Understand, what has happened is the opposite:
The share of wages in national income (GDP) has declined by around 10 percentage points in the G20 countries over the past three decades.
So, this is where the dumbness or lying part comes in: what part of "I don't have any fucking money to spend on the shit we're producing so..."
Or, put another way: when the share of prosperity being created by shit being made (also known, in more refined terms, Gross Domestic Product) goes to the top one percent, why would anyone think there is enough left for other people to go to the store and spend?
And, to slap these idiots in the head a bit more, the Federal Reserve Board's just-posted 2013 Survey of Consumer Finances(yes, the Fed operates on smoke-signal paced timing) tells a similar story with three central points:
Families at the bottom of the income distribution saw continued substantial declines in average real incomes between 2010 and 2013, continuing the trend observed between the 2007 and 2010 surveys.
And:
For the median family with debt, debt burdens also fell between 2010 and 2013: Leverage ratios, debt-to-income ratios, and payment-to-income ratios all fell. The fraction of families with payment-to-income ratios greater than 40 percent declined below the level seen in 2001.
And:
Retirement plan participation in 2013 continued on the downward trajectory observed between the 2007 and 2010 surveys for families in the bottom half of the income distribution.
Meaning: people don't have money, and whatever dollars they could earn went to pay down debt because they are freaked out that another financial crisis could come again (some of the lower debt also comes from people who just lost their homes) and people are shit out of luck when it comes to retirement.
The bottom line from the ITUC:
In summary, a policy mix of raising the wage share (e.g. through well set minimum wages and widening the coverage of collective bargaining) together with increased public investment in social and physical infrastructure would give a significant stimulus to growth and, hence, employment over a five year period in G20 countries.
Translation: let unions organize, raise poverty-level minimum wages, dump the stupid Andrew Cuomo-type austerity (a pre-election point about the New York governor's repeated austerity budgets), put money into roads and bridges (much more stimulus, not less stimulus) and, presto, you'd have a growing economy.
It is so obvious you'd think they were intentionally lying so they could steal from us...