Friday, February 10, 2017

Don't blame fellow-workers

 The advent of advanced technology has meant that jobs can be outsource and this has meant an expansion of opportunities for workers overall. Many workers in developed countries, however, feel that jobs that were rightfully theirs were taken away by workers in other countries, or by immigrants who are willing to work for low wages. This is a labour-versus-capital, or labour-versus-technology, problem. Automation has meant that even periods of high economic growth have not been periods of high growth of jobs. In periods of low growth or recession, such as we have seen in the US and Europe since the 2008 financial crisis, the already gloomy picture becomes even bleaker.

In September 2016, a group of 13 economists, along with Nobel laureate Joseph Stiglitz and three other chief economists of the World Bank, met in Sweden to deliberate on the main challenges facing the global economy, and drafted a document highlighting some key issues. This consensus document, the Stockholm Statement, explained the real reason for depressed incomes and unemployment of the working classes in developed countries was not that workers from other countries are taking jobs but the two main culprits were the slow rate of creation of new jobs, and the increasing inequality in the share of labour (wages) and capital (profits) within their own countries. While job and wages have grown slower compared to national incomes, salaries at the top have not only kept pace, but their rate of growth might even be higher. Thus, the gap between salaries of CEOs and top ranking managers and workers within firms has been increasing. Thomas Piketty’s new research shows that in the US, in the past 30 years, the growth in the incomes of the bottom 50% has been zero, whereas the growth in the incomes of the top 1% has been 300%.