[P2P-F] Fwd: Christopher - Excellent Concise Article -

[Michel Bauwens]

---------- Forwarded message ----------
From: Christopher M. Quigley <cmqesquire at gmail.com>
Date: Fri, Sep 1, 2017 at 4:26 PM
Subject: Fwd: Christopher - Excellent Concise Article -
To: Michel Bauwens <michel at p2pfoundation.net>


Michel,

For your review.

Christopher

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charles hugh smith "Of Two Minds".

Thursday, August 31, 2017
Why We're Doomed: Stagnant Wages
<http://charleshughsmith.blogspot.ie/2017/08/why-were-doomed-stagnant-wages.html>
*The point is the present system cannot endure.*
*Despite all the happy talk about "recovery" and higher growth, wages have
gone nowhere since 2000*--and for the bottom 20% of workers, they've gone
nowhere since the 1970s.
*Gross domestic product (GDP) has risen smartly since 2000, but the share
of GDP going to wages and salaries has plummeted:* this is simply an
extension of a 47-year downtrend.

*Last month I posted one reason Why We're Doomed: Our Economy's Toxic
Inequality
<http://www.oftwominds.com/blogaug17/doomed-inequality8-17.html> (August
16, 2017). The second half of why we're doomed is stagnant wages*. Why do
stagnating wages for the bottom 95% doom our status quo? As I noted
yesterday in Why Wages Have Lost Ground in the 21st Century
<http://www.oftwominds.com/blogaug17/wages-flat8-17.html>, *our system
requires ever-higher household incomes to function*--not just in the top
5%, but in the top 80%.
*Our federal social programs--Social Security, Medicare and Medicaid--are
pay-as-you-go:* all the expenditures this year are paid by taxes collected
this year. As I have detailed many times, the so-called "Trust Funds" are
fictions; when Social Security runs a deficit, the difference between
receipts and expenses are filled by selling Treasury bonds in the open
market--the exact same mechanism ther government uses to fund any other
deficit.
The demographics of the nation have changed in the past two generations.
The Baby Boom is retiring en masse, expanding the number of beneficiaries
of these programs, while the number of full-time workers to retirees is
down from 10-to-1 in the good old days to 2-to-1: there are 60 million
beneficiaries of Social Security and Medicare and about 120 million
full-time workers in the U.S.
*Meanwhile, medical expenses per person are soaring.* Profiteering by
healthcare cartels, new and ever-more costly treatments, the rise of
chronic lifestyle illnesses--there are many drivers of this trend. There is
absolutely no evidence to support the fantasy that this trend will
magically reverse.
*Costs are skyrocketing and the number of retirees is ballooning, but wages
are going nowhere. Do you see the problem?* All pay-as-you-go programs are
based on the assumption that the number of workers and the wages they earn
will both rise at a rate that is above the underlying rate of inflation and
equal to the rate of increase in pay-as-you-go programs.
If 95% of the households are earning less money when adjusted for
inflation, and their wealth has also declined or stagnated, then how can we
pay for programs which expand by 6% or more every year?
*The short answer is you can't.*
The budgets of state and local governments also expand every year as
citizens demand more services, infrastructure requires costly maintenance
and upgrades, and the overall costs of providing government services rises
(soaring healthcare premiums are a major driver of higher government
expenses). How can households pay higher property and sales taxes if their
incomes are going nowhere?
*Stagnant wages = stagnant income tax revenues.*
*Then there's the consumer economy that depends on ever-higher consumer
spending.* If wages are stagnant, how can households spend more money? The
conventional answer is: we'll blow asset bubbles in stocks, bonds and
housing, and households can spend this newfound wealth.
*Nice theory, but only the top slice of American households own enough of
these assets to matter.* Feast your eyes on these two charts of
skyrocketing income and wealth inequality. This chart shows that the
majority of income growth is now concentrated in the top 1/0th of 1%, and
most of what's left has gone to the top 5%. This is the only possible
outcome of financialization and central-bank inflated asset bubbles.
*Here's another look at the same dynamic, but excluding capital gains,
which flow to those who own most of the assets, i.e. the top 1%*: the
bottom 90% lost 10% in the decade 2002-2012, the top 5% gained 6% and the
very top of the wealth-power pyramid, the top 1/100th of the 1%, gained 76%.
*The conclusion is sobering: wages/salaries are no longer an adequate means
to distribute income or paid work.* Our system is broken at the deepest
levels--not just economically broken, but socially broken as well. Clinging
to this broken model and filling the widening gap between the super-wealthy
and everyone else with more debt will doom the system.
This is why I've proposed a new way to organize production, consumption,
work and income in my book A Radically Beneficial World: Automation,
Technology & Creating Jobs for All
<http://www.amazon.com/gp/product/B0178MQI1M/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=B0178MQI1M&linkCode=as2&tag=charleshughsm-20&linkId=CGXPIKGVST4OBTXU>
.
*The point is the present system cannot endure.* Borrowing trillions of
dollars to paper over this failure won't work for much longer. We need a
new system, or we're well and truly doomed.











-- 
Check out the Commons Transition Plan here at: http://commonstransition.org


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