This is a really big problem. It reflects broken mechanisms in the allocation of produced wealth within companies and the society, and in extension, a bad use of produced goods and services. It does also hold back the economy. If wages now were as high as they could have been, ie if employees had kept the same percentage of the money (or more) when the economy grew, there would be a lot more demand and in return a lot more jobs. In addition people would have both more stuff and less debt, which means that the economical growth would have been made better use of. Now how can this be solved? This is a tougher question. Redistribution of wealth can mitigate the problem, but it's like treating the symptoms instead of the disease. I believe the rules for how companies are run must be changed. An interesting suggestion I've seen involves the management of a company to be democratically elected by all employees once every couple of years or so (one vote per person, possibly with more votes for those who have been employed for a longer time or similar). This would not only keep them from taking too much of the cake for themselves, but would also force them to create good working conditions. They would still have to try to generate maximal profit for the company, of course, anything else would mean less money for the employees which they would most likely not be very happy about. It would essentially be sort of as if every employee in a company owned equal shares of said company. This could even out the distribution of generated profit greatly, but this model has other problems. Companies would be less prone to firing people, for instance, even when that would be better for the business and/or development, and a new model for how investments are made (replacing shares) would have to be worked out (I imagine some kind of system involving simple loans to the company made by private persons or banks could solve that, though). It is in general always stupid to test the depth of the water with both feet, but I would love to see experiments with this form of enterprising. If it works out it could replace joint-stock-companies.
excuse my ignorance in economics but : 1.does this curve has to do anything with the explosion of debt ? 2. is there a relation between this curve and the constant printing of fiat money ?
The growing inequality cannot be understood outside the context of all the immigration that has been going on. Immigration not only creates inequality directly, but also displaces workers, drives down wages, and drives up the cost of housing in the urban areas, all of which indirectly contribute to higher levels of inequality.
I agree with Lord Joar on this issue, and the organizational scheme of which he speaks is that called a workers' or producer cooperative. If that does not work on its own, I propose the government regulate compensation within the cooperatives so the initial distributions of income and other benefits to workers at each firm are less inequitable. So, instead of having a single minimum and maximum wage set for all businesses nationwide, the cooperatives could be required to compensate employees within a certain range of values - a range set relative to the average employee's income there, a ratio between the least and most compensated employees at the co-op in question, or some other method of setting boundaries on ratios of pay intended to have the effect of ensuring profits benefit workers at all tiers of earnings within the organization. I reckon this would give people a strong incentive for working hard rather than settling for mediocrity and a steady, unwavering wage or salary controlled at the whims of profit-seeking administrators.
