Union Membership and Middle-Class Income
In the US, right-wing legislators continue their attack on labor unions. These politicians ignore one simple fact: unions were a major force in building and sustaining the great American middle class, and as they declined, so has the middle class. CAP’s Karla Waters and David Madland showed in a report first published in January 2011 that as union membership has steadily declined since 1967, so too has the middle class’s share of national income, as the super-rich have taken a larger share of national income than any time since the 1920s.
http://thinkprogress.org/2011/03/03/unions-income-inequality/
ECB is driving down wages
The European Central Bank is strongly hinting that it will raise interest rates at its next meeting, in response to rising headline inflation -- even though this rise is the result of rising food and oil prices, which are not the results of ECB policy. Suppose that we focus on wage rates, which are often seen as the stickiest, most inertia-driven prices. The eurozone, like the US, has seen wage growth slump in the face of high unemployment. So what the ECB is saying, in effect, is that Europe should drive down nominal wages -- which can only be done by raising the unemployment rate -- in order to offset the effect of oil and food on headline inflation. (Real wages will fall in any case.) Is this really a policy that the ECB would defend in so many words? I doubt it. But however sober and dignified talk of price stability may sound, that is what the proposed policy amounts to.
http://krugman.blogs.nytimes.com/2011/03/04/the-madness-of-jean-claude-trichet/
Too much inequality kills the work ethic
Capitalism relies on inequality. Pay disparities steer resources to where they would be most productively employed. Inequality spurs economic growth by providing incentives for people to accumulate human capital and become more productive. It pulls the best and brightest into the most lucrative lines of work, where the most profitable companies hire them. Yet the increasingly outsize rewards accruing to the nation’s elite threaten to gum up this incentive mechanism. If only a very lucky few can aspire to a big reward, most workers are likely to conclude that it is not worth the effort to try. The odds are not on their side. Inequality has been found to turn people off. Ultimately, the question is this: How much inequality is necessary?
http://www.nytimes.com/2010/12/26/business/26excerpt.html
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