"Now, I was listening to Max Keiser report today (he is funny). In the UK inflation is running at 3.3% (LAST 12 months) whilst wages have grown a 0.9%. So it would seem household income in the UK, at least, is falling in real terms." Hummmm, maybe not. Why? Because it depends on several things including on how the system of national accounts views profit retention by corporations. I think that it views it as income that was distributed in the form of dividends that were automatically reinvested. However I am not sure because the last time I was interested in this matters was 47 years ago .
Why is this important? Because with inflation at 3.3% and wages growing at only .09% its means that the distribution of income is being re-arranged in a way that favors the remuneration of capital over labor. But household income is made of WAGES PLUS PROFITS PLUS RENT. Look at the picture bellow of a simple two sector model about the circulation of income and goods. Where did I get this crap from? Well from a source where all content is open to peer review and called Wikipedia.
On the US gov debt. Extract from Krugman.
"The vertical axis measures the projected ratio of federal debt to GDP. The blue line at the top represents the projected path of that ratio as of early 2011 — that is, before recent agreements on spending cuts and tax increases. This projection showed a rising path for debt as far as the eye could see.
And just about all budget discussion in Washington and the news media is laid out as if that were still the case. But a lot has happened since then. The orange line shows the effects of those spending cuts and tax hikes: As long as the economy recovers, which is an assumption built into all these projections, the debt ratio will more or less stabilize soon.
CBPP goes on to advocate another $1.4 trillion in revenue and/or spending cuts, which would bring the debt ratio at the end of the decade back down to around its current level. But the larger message here is surely that for the next decade, the debt outlook actually doesn’t look all that bad.
True, there are projected problems further down the road, mainly because of the continuing effects of an aging population. But it still comes as something of a shock to realize that at this point reasonable projections do not, repeat do not, show anything resembling the runaway deficit crisis that is a staple of almost everything you hear, including supposedly objective news reporting.
So you heard it here first: while you weren’t looking, and the deficit scolds were doing their scolding, the deficit problem (such as it was) was being mostly solved. Can we now start talking about unemployment?"
And if you think that only the West is in trouble then you must have missed Krugman's article on China. If that is the case, the link to it is here.
Look. There are lots of problems including, but by no means limited to, income inequality not only in the US, Europe, and everywhere else, but the solution to them is political. My generation attempted to solve some of them, but obviously failed.
