Pictured above is Tyler Cowen. According to the write-up on Cowen in Wikipedia, which is where that link will take you, Cowen is "an American economist, columnist and blogger." He is also a professor at George Mason University, where he holds the Holbert L. Harris chair in the economics department.
Cowen's blog is called "Marginal Revolution," and his blog postings do sometimes focus, as seems appropriate, on topics directly related to economics. However, Cowen places an extremely high value on his own thoughts on virtually every topic, and his "Marginal Revolution" blog provides readers with Cowen's personal views on a multitude of subjects. Cowen has organized his blog postings by the following categories, so if you want to hear from Cowen (on virtually anything), please feel free to select an appropriate category and click away! My apologies if you would like to think about "Sex." There is no Tyler Cohen category for that.
My own blog posting, today, is a reaction to one of Cowen's blog postings from May 14, 2024 - a blog posting that is not about Cowen's "travels," or about his views on "sports," or about "food and drink," but is actually about economics. Here is what Cowen has to say on a rather important topic:
oooOOOooo
The Decline In Labor’s Share Of National Income
Tyler Cowen
May 14, 2024
May 14, 2024
That is the topic of my latest Bloomberg column, here is one excerpt:
There is some bad news afoot for workers. Labor’s share of the US gross domestic product has been falling for a long time, by seven percentage points since World War II. The labor share for 2022 — depending on exactly which measure is used, it comes in at slightly more than 60% — is the lowest measured since 1929.
And it’s not just America. Globally, the labor share, which is the fraction of an economy’s output that goes to workers, has declined by six percentage points since 1980. The numbers suggest that the share of labor is declining in 13 of the 16 wealthiest countries in the world...
One possible explanation for labor’s declining share is simply that the cost of capital has been falling for decades in most countries. That development benefits capital income very directly: It’s cheaper to raise capital, which benefits workers only indirectly. Of course, with real interest rates higher recently, it will be possible to test whether the labor share of income will make a comeback. In any case, this stands as one of the most plausible hypotheses.
Globalization and automation are two other trends that may have made labor markets more competitive, at least as compared to capital markets. Yet it is not obvious why those forces would lower labor returns more than capital returns. Is labor more mobile internationally than capital? Even if you think US companies have benefited from buying cheap manufactured goods from China and then reselling them at the expense of US workers, that doesn’t explain why labor’s declining share has been so widespread across countries and decades. If globalization were the culprit, labor’s share should be rising in China and other major exporting countries — but the opposite is true.
There is much more at the link. And I do recommend this article by Loukas Karabarbounis, published in the Spring 2024 issue of The Journal of Economic Perspectives. It, too, addresses, "Perspectives on the Labor Share."
oooOOOooo
As for Cowen, I found Cowen's summary observations about "Labor's Share" to be rather unsatisfactory. Note that Cowen provides no real "value judgment" about the report he delivers (although he does note that there is "bad news afoot for workers"). Overall, though, what should we think about the fact that "Labor's Share" has been falling? Is this something we should all be worrying about? And if we should be worrying about it, how much? Will it make a difference - and what kind of a difference will it make? Who is going to be hurt? Who is going to be benefitted? Cowen expresses no opinion on any of those questions. Mere "observations" can be helpful, but what is really called for, I think, would be some evaluation of what the "facts" portend.
In addition, besides providing us with some basis for judging the importance and probable impact of what Cowen is reporting, it would have been nice if Cowen had given us some idea of what we might do about the phenomenon he describes. I always think that the purpose of "observation" should be to provide us with the facts that will allow us to take an appropriate "action" in response.
Unlike Cowen, I am not reluctant to provide my own value judgment about the facts he reports. I think that the decline in "Labor's Share" is not only a bad omen for our politics, economy, and society in general, I also think we need to do something about it.
A while ago, I reported in this blog about a Santa Cruz activist who is now using, as a "signature line" on the communications he dispatches by email, the following advisory message:
This strikes me as accurate, and is another way to say the same thing that Cowen reports. "Labor's Share" in our economy is declining because those who already have a lot of money (and who own the businesses that produce economic wealth) are demanding that they receive even more money than they already get.
What can we do about it? And what should we do about it? We can (and should) mandate that the contribution that workers make to the economic success of a business must be properly and proportionally rewarded, on a current basis. Just as the shareholder owners of a corporation get distributions from business profits, to honor their contributions to the company's success, so should the workers who contribute their labor.
That kind of a solution to the observation that "Labor's Share" is falling would require new laws, establishing new rules that businesses would have to follow. We can change how our economy is governed, by enacting new laws, and my favorite equation shows us where we have to start:
Politics > Law > Government
It is possible to change "the law." It is possible for ordinary persons to change the law. I have, personally, been involved in changing laws at the local, state, and national level, with these changes in the law having then had an extremely significant impact on how our local, state, and national life is governed. My personal efforts have mostly impacted life Santa Cruz County, California - but I have actually played a role, personally, in changing the law at every level of our government.
I don't call my blog, "We Live In A Political World" for nothing. If we want to change the laws, to change the way our world is governed, we need to get involved in "politics." We need to get involved ourselves. That's where change begins.
No comments:
Post a Comment
Thanks for your comment!