San Francisco – California

 

 

 

 

We have Workers Share Of Wealth?

 

 

 

The lead editorial says “Workers Claim a Shrinking Slice of the Pie”.

 

The article describes in detail how the worker’s  ”slice” of the Gross National Product has decreased from 59% in 1959 to 52.7% in 2012, a decreased share of 6.3% of the GNP

The suggestion is that some government adjustment is needed to correct this “wrong” trend, which could become even worse with robots and AI.

Now look at an index of the pie that is being shared:

 

         GNP 1970:   5,000                 per capita:      $17,036

                  2018: 19,908                                          $53,000

                  343%                                                     311% 

 

This tells us that while the worker’s share declined by 6.3%, their wealth went up over 300 % during the last 5 decades.

 Why has the modern economy become more profitable (5,000 GNP to 19,908 GNP) ?

Is it because the workers worked harder, or; that they worked more efficiently – and why would that be.

The answer is that increased profits of the companies went into investment in computers and other labor enhancing devices and equipment.

A transfer of a larger share to the workers would decrease investment and thereupon decrease the increase in the GNP and their incomes.

So if the logical solution to the headline in the Wall Street Journal was to increase wages and reduce profits: will that increase workers incomes — no it will just give them a larger share of a shrinking wealth.

Result:  reduced GNP

 

 

 

 

 

 

 

 

 





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