Wages/Income and Productivity Graph;
Though I wrote about wages, actually insufficient wages, it
was incomplete with any empirical evidence. Here I want to rectify my mistake.
As we can see in the above picture that wages are coinciding, actually above, with the productivity before 1966 (around) but as we approach 1970 wages start falling below the productivity and has been constant from there. But after 1970 productivity increased unprecedently (doubled) and wages/incomes not. In the theory we equate wages/incomes with productivity. Same condition with median household income, it is constant.
So, in very short, if productivity has doubled wages should double too. But this has not happened. This is not sustainable in any way. People must be very disappointed. Its like repression of wages, though prices are nearly constant since 1970 with few glitches.
But the economy has not increased in terms of wages/income and
value or amount of money. Wages are constant, prices are constant. But the need
is, prices constant and wages/incomes rising, either in terms of amount or
value. If we are growing the money should also grow in terms of value and/or
amount. Any investment we make grows with time. Even currencies appreciate. If
prices grow and money (value and amount) does not it is loss. And if both are
constant it is a neutral position, the situation we have, we are not growing.
But if we have an internal devaluation it can solve the purpose without raising wages/income, in terms of value. People would be able to buy more goods and services with the same amount. Its possible…
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