What's wrong with the American Economy? Income inequality, due, in part, to an over-emphasis on shareholder value as our prevailing metric for corporate success.
And that's according to Henry Blodget, editor of Business Insider.
Fairness aside, the problem with this state of affairs is that it leaves hundreds of millions of American consumers—the real engines of the economy—with little money to spend. With consumers having little money to spend, businesses suffer. As businesses suffer, they look for ways to cut costs. And this, in turn, hurts employees (consumers) even more.
The reasons for the inequality include globalization, technology (and the incumbent increase in individual productivity), flat hourly wages and tax policies that favor investors and high wage earners.
Last week in the hub-bub about the Jetsons' 50th anniversary, I heard a few mentions of George Jetson's 9-hour work week, a guesstimate made back in the 60s that actually had some grounding the economy theory. Of course, it hasn't worked anything like that -- instead of income increasing dramatically to match the productivity of individual workers -- and thus their spending power increased and/or workload decreased -- we've largely stagnated for the past 50 years on wages.
Not, as Henry notes, that everyone's got it bad:
One thing to keep in mind as we think about how to fix this state of affairs is that this is not an era in which everyone is suffering. Everyone is not suffering. Big companies and their owners and senior managers are not suffering. They are doing great. Big companies and their owners and senior managers, in fact, are doing better than they have done at any time in history, at least judging by the amount of profit they are producing.
It's everyone else who is getting hosed.
The question isn't whether this is fair or whether you want to call being concerned about this problem "socialism" -- the question is whether it's sustainable. And the answer might be right here in our current economic morass.