Subject: Re: Dividends
Jim,

I appreciate your attempt to teach me economics, but your example bears no relationship to reality and doesn't even work out mathematically. How can a worker generating $10/hr in value demand $55/hr in wages? Even if this was an entirely worker controlled enterprise, it would go out of business in a week.

You repeatedly talk about how profit rates have been running above historical averages, and that the continued expansion of the share of corporate profits to total gdp cannot continue. This is the reason why you believe stock markets are overvalued and the elevated PE ratios cannot continue to expand indefinitely. It's also the reason Buffett believes Berkshire cannot continue to grow at much better than the rate of GDP. Figure 1 in this report captures what you have been saying very nicely:

https://cdn.pficdn.com/cms/pgi...

Corporate America has been benefiting from not just the growth of the economy, but the growth of its share of the economy relative to labor's share as well. Worker's share of GDP has fallen from 58% in the early 1970s to 53% today, while capital's share has risen from 15% to around 20%. The economic gains of capitalists have largely come through the wage repression globalization has wrought on the American working class. It has been a very effective policy of redistribution. And this only considers the distribution of total income within a nation. We haven't even begun to think about this at a global scale.

The point here is that you yourself have acknowledged the shift in class shares of the national income. Wealth flows from the low wage regions of the world economy to the centers of profit accumulation. The working class in those centers of accumulation benefit from this regional concentration of global wealth through higher wages. It makes political sense for the accumulator class because an overabundant population of politically restive poor people would make life difficult for owners of capital in these national centers of accumulation.

Your disciplining of the American working class for its unrealistic and undeserved claims upon national income makes no sense if you abstract from capital's increasing share of that national income. Is capital's claim on an ever increasing share of the national income somehow justifiable and deserved, while labor's is not? The real cause of poverty in Bangladesh, or any of the other low wage regions of the world economy, is that capital has used the economic and political weakness of these post-colonial societies to extract surplus rates of profit from their workers. The wage gap between American and Bangladeshi workers could be narrowed either by wage repression in the US (which has been happening for 40 years) or through the redistribution of income away from capital and toward global workers through higher wages paid to those workers, or both. We're starting to see that wage inflation in China, which has a strong state, but that makes China less attractive to western based capital.

Greedy workers in Detroit are not the cause of global inequality in wages. The wage pie is not static, it can grow both through global gdp growth and through a more equitable distribution of income between capital and labor. Global capitalist enterprises like Walmart or Apple have more to say about wage levels in low income countries than auto workers in Detroit.

Phil