Vox article with insights into labor share
Here is a link to an article at Vox which includes insights and wisdom into the effect of falling labor share globally.
Monetary Policy and Long-term Trends
Excerpts…
“There has been a long-term downward trend in the share and strength of labour in national income, which is depressing both demand and inflation.”
“… So, the trend weakness in returns to labour will simultaneously tend to hold down consumption, output, and inflation …”
“This coincidence of a declining wage share and declining real interest rates is not, we believe, accidental.”
“From a short-term, business cycle viewpoint, a conjuncture of sluggish output growth and low inflation, surprising on the downside, should be met with and rectified by more expansionary monetary policy. But if one accepts the hypothesis that a (perhaps the) longer-term driver of such a conjuncture is the relative weakness of labour as a factor of production, then this short-term response is unhelpful, indeed somewhat counterproductive, in a longer-term context. Its main effect is to raise asset prices, and the relative value of land and capital, and thus benefit their owners, who are rich, rather than workers, who are poor.”
Actually the article is discredited, IMO, by the fact that they could say this: “Against this background, the bipartisan political incentive in the US to encourage more mortgage lending to the poorer, disadvantaged classes was entirely understandable. But it ended in the sub-prime crisis.”.
Then of course there is the statement that they feel that the trend could reverse itself over the next 35 years. It strikes me that articles like this almost inevitably ignore the ego and desire to hang on to power, and make no mistake, money is power, on the part of those who have acquired it. Whatever “natural” economic factors they might feel would have that result will be fought against tooth and nail by the 0.05% or whatever percentage of the populace holds the majority of wealth by the time this trend would reach whatever natural peak the writers might feel it has.