Jared Bernstein’s Ungap

Jared Bernstein posts09economix-ungap-blog480 a great analysis.

In short, the declining share of national income that goes to wages (versus “capital” – such as owners, shareholders, etc: “unearned” income) can be fully attributed to the slack in the labor market since the 1990’s (the last time we were at full-employment). Bernstein also finds that globalization, by itself, is apparently not a significant factor, because globalization’s effect on imports is necessarily balanced out by its effect on exports, in the aggregate (and this analysis cut across nations).

Thus, the conclusion is that what policy-makers really ought to be focusing on is getting the economy to full-employment. As long as this does not occur, an increasing share of business income will go to whoever “owns” the businesses, which inherently increases income and wealth inequality.

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About stormculture

In pursuit of reality.
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