Monday, April 19, 2004

The concentration of wealth is bad for the economy

Title: In politics, Wall Street ignores history
Source: Christian Science Monitor
Date: April 12, 2004

From the article:
    While workers have seen incomes rise, corporations have reaped an unusually large share of the wealth, according to a study by the Center for Labor Market Studies at Northeastern University in Boston. In the last two years, GDP increased about $800 billion. Corporations got $325 billion of that sum; employees got $310 billion, the study finds.

    'This is really very disproportionate,' says Paul Harrington, one of the economists who did the study. It's 2.5 times the usual share companies get in an economic recovery in the United States.

    As he sees it, companies have reaped too large a chunk of the 7.3 percent increase in productivity in those two years. Business has relied on job outsourcing and cheaper contract employees to boost the bottom line. Labor, with weak unions and facing high immigration, has been relatively powerless to demand its share of increasing prosperity.
This "very disproportionate" process is the foundation of the concentration of wealth. What is so interesting about the article is that it acknowledges that the process is bad for the economy as a whole. Nonetheless, the process continues, and is rapidly accelerating right now.


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