NEW YORK (Bullion Bulls Canada) — In writing about the relentless collapse of Western economies, I frequently point to “40 years of plummeting wages” for Western workers, in real dollars. However, where I have been remiss is in quantifying the magnitude of this collapse in Western wages.
On several occasions, I have glibly referred to how it now takes two spouses working to equal the wages of a one-income family of 40 years ago. Unfortunately, that is now an understatement. In fact, Western wages have plummeted so low that a two-income family is now (on average) 15% poorer than a one-income family of 40 years ago.
Regular readers will recognize the chart below on U.S. average wages.
Using the year 2000 as the numerical base from which to “zero” all of the numbers, real wages peaked in 1970 at around $20/hour. Today the average worker makes $8.50/hour — more than 57% less than in 1970. And since the average wage directly determines the standard of living of our society, we can see that the average standard of living in the U.S. has plummeted by over 57% over a span of 40 years.
There are no “tricks” here. Indeed, all of the tricks are used by our governments. The green line shows average wages, discounted by inflation calculated with the same methodology for all 40 years. Obviously that is the only way in which we can compare any data over time: through applying identical parameters to it each year.
Then we have the blue line: showing wage data discounted with our “official” inflation rate. The problem? The methodology used by our governments to calculate inflation in 1975 was different from the method they used in 1985, which was different than the method they used in 1995, which was different than the method they used in 2005.
Two obvious points flow from this observation. First, it is tautological that the only way in which data can be compared meaningfully is to use a consistent methodology. If the government thinks it has improved upon its inflation methodology, then all it had to do was take all of its old data and re-calculate it with their “improved” methodology. Since 1970 there is this invention called “computers” which makes such calculations rather simple.
This brings us to the second point: the refusal of our governments to adopt a consistent methodology in reporting inflation statistics can only imply a deliberate attempt to deceive, since it is 100% logically/statistically invalid to simply string together disconnected series of data — and present it as if it represents a consistent picture. More specifically, we can see precisely what lie our government was attempting to get us to believe.
Courtesy of http://nowandfutures.com/index.html
Roughly speaking, the blue line trends flat. Thus, the U.S. government (and most Western governments) has been lying about inflation for the last 40 years as a deliberate means of hiding the 50+% collapse in the standard of living for the average person. Meanwhile, the situation is more than reversed if you’re one of the fat-cats at the top. While average American workers have seen their wages plummet by 57% over the past 40 years, in just 15 years (1992-2007) the 400 wealthiest Americans saw their incomes rise by 700%.
Now we have the complete picture: wages grinding steadily lower year after year, decade after decade for the Little People, while wages go straight up for the fat cats. To say this is unfair would rank as one of history’s greatest understatements. This is economic rape, plain and simple.
To this point I have only presented the consequences of our economic rape, in a chart which is totally unequivocal/incontrovertible. The causes of that economic rape are equally obvious in terms of categories, although the actual analysis of those causes is somewhat more complex.
1) Taxation oppression. As I detailed in a previousthree-part series, income taxation is the worst possible form of taxation which could possibly be devised. The length of criticisms is virtually infinite, but at the top of the list is the fact that as a matter of basic arithmetic, all income-taxation systems must funnel all wealth into the hands of the ultra-wealthy, over time. This is precisely what we see today. Billionaires and trillionaires sit with the largest fortunes in history — while ordinary people have been turned into “the working poor.”
2) Systemic/structural unemployment. Technology always eliminates jobs faster than it creates new opportunities. This means that our economies are permanently reducing jobs (andcreating structural unemployment) every day, every week, every month, every year. For more than 200 years, our governments have dealt with this permanent structural unemployment problem by shortening the work week every few decades…until now. The refusal of our governments to shorten the work week (while we have the worst structural unemployment in history) is a deliberate attempt to maintain massive unemployment – which is the strongest downward driver of average wages.
3) Oligopolies/monopolies. It is elementary capitalist theory that monopolies and oligopolies are unmitigated evils. By definition they are 100% parasitic, and 100% non-competitive — and have absolutely no place in any capitalist economy. Yet today the global economy is totally overrun with these gigantic, non-competitive parasites. With these mega-parasites permanently blood-sucking us, the impoverishment of our societies was an inevitable result.
Having now seen the consequences of our problems and the causes of our problems, the solutions are obvious. To even halt the slide in our wages (and standard of living) we must eradicate at least one of these three problems. To reverse this trend (and restore our standard of living) requires eradicating all three problems.
Read the rest at The Street