RE: [OPE] real wages and productivity growth

Date: Mon Nov 17 2008 - 08:31:57 EST

> > Key to Rick Wolff's explanation of the economic crisis> > was the claim that there is a long-term gap between real wages> > and productivity in the US (see, especially, his video lecture). > There is a problem with this in general as a thesis as the US as a > whole is massively overconsuming and under saving.
Hi Paul C:
I think that fits rather well with his thesis: in the presence of
long-term relatively stagnant real wages, working-class households
have been able to increase consumption only by increased
borrowing from financial institutions. In addition to stagnant real
wages, credit card debt is a major reason for the decreasing rate
of savings by these households. That's a HUGE bubble that hasn't
burst yet - and, at present, legally can't since Congress passed
legislation years ago which prevented consumers from declaring
bankruptcy as a way of nullifying credit card debt. How this will
be resolved is anybody's guess: if working-class families lose
their homes, other forms of tangible property, no longer have savings
or jobs, how will they possibly be able to pay back credit card debt?
In solidarity, Jerry

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Received on Mon Nov 17 08:33:48 2008

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