Decades after World War II, Polish economist Michal Kalecki described inflation as a class struggle between business and workers. If the latter still manage to achieve higher wages, the former try to compensate for the increase in costs by raising the prices of products, forcing workers to demand even larger increases and further along the «wages-price-wages» spiral. But if workers cannot have any influence on the size of wages, as is now happening in many spheres of production, then there is no spiral movement and there is no increase in inflation or it is minimal.
Incredible, but true: even some representatives of the US Federal Reserve are inclined to believe that inflation may be associated with the class struggle. For example, Richard Clarida, an economist from Columbia University who has just started as vice chairman of the Fed, notes a drop in the share of labor services (wages and entrepreneurial income) in national income from 71% in 1970 to 66.4% in 2018.
In 2016 Barry Rietholtz
Fans of Marxist theory like to call the current situation the result of the «class struggle» between capitalists and workers, the consequence of which is the loss of the latter’s share in the value created. Indeed, data on the dynamics of the share of workers and entrepreneurs in GDP confirm the existence of redistribution. However, is this the source of low inflation and growth? We believe that no. According to many economists, including
The concentration of income in the hands of the richest part of the population inevitably leads to an increase in savings: the population with a low or middle income level is spent on consumption, thereby pushing economic growth, while the rich, on the contrary, save. Economic politicians have not yet learned how to solve the problem of economic inequality, since, for example, the implementation of measures aimed at improving the quality and accessibility of education takes decades and can hardly be carried out within 1-2 electoral cycles. As a result, politicians use populist solutions that are like sugar. They make you happy for an hour, but systematically lead to the tragedy of diabetes. This was the case with the incentives for American families to buy real estate: it all began with the noble goal of helping citizens realize the American Dream, and ended with the greatest financial crisis in modern history.
First, it is worth remembering that the average person without a modern high-quality education on the festive table of globalization, liberalization and productivity growth will get nothing but bones. Secondly, you should be more careful about investing: the sooner you start investing in shares of global companies, the more chances you have to return to the festive table, because it is investment in shares (transformation from a labor supplier into a capital supplier) that provides access to gains from economic growth.
Naturally, the question arises: how to invest in order to guess the future technology leaders? There is a fairly simple recipe here: invest through index instruments (such as
If you liked the article, support us with like and subscribe to the channel.