This is an excellent MUST READ article from the Economist. Check it out!
via Workers’ share of national income: Labour pains | The Economist.
The Economist article presents similar conclusions to well-known, macro-economist, Gavyn Davies writing in his FT blog. Let me pick up my thread from my earlier blog as it’s still valid.
I particularly liked Gavin Davies’ the focus on four fundamental economic trends, namely:
- Decline in unionisation in the major developed economies
- Rise of “financialisation”, which has increased the incentives on management to maximize the return on capital for themselves and shareholders
- Technology revolution, and
These four pivotal trends devalue the importance of labor, so that jobs have become increasingly commoditized; this is the thrust of the Economist’s argument too.
This leads me again to some important open questions:
Given the four economic trends in major business namely, declining unionization, rising financialization, technology revolution and globalization, how should Western Governments respond to:
- Take a strategic approach to economic growth, building upon strengths and cutting out public sector waste?
- Ensure effective taxation of profits?
- Increase the skill-base of the nation?
- Deploy the adult population effectively?
- Deploy Scandanavian style social policies?