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Attention Marxists: Labor's Share Of National Income Drops To Lowest In History

Tyler Durden's picture


Probably the most imprtant secular trend in recent employment data, one that has a far greater impact on the macroeconomic themes than Birth/Death and seasonal adjustment manipulated month to month shifts in the employment pool per either the household or establishment surveys, is the labor share of national income. In a 2004 paper from the St. Louis Fed, the authors make the following statement: "The allocation of national income between workers and the owners of capital is considered one of the more remarkably stable relationships in the  U.S. economy. As a general rule of thumb, economists often cite labor’s share of income to be about two-thirds of national income—although the exact figure is sensitive to the specific data used to calculate the ratio. Over time, this ratio has shown no clear tendency to rise or fall." It would be wonderful if this was true, and thus if the US population really had a stable distribution of income between laborers and capital owners. Alas it is dead wrong. In fact, as the latest note from David Rosenberg points out, the "labor share of national income has fallen to its lower level in modern history - down to 57.5% in the first quarter from 57.6% in the fourth quarter of last year, 57.8% a year ago, and 59.8% when the recovery began." And here is where the Marxist-Leninist party of the US should pay particular attention: "some recovery it has been - a recovery in which labor's share of the spoils has declined to unprecedented levels."

Like Rosie, Zero Hedge is not a marxist blog: quite the opposite, but like him we come to the same troubling conclusion: "extremes like this, unfortunately, never seem to lead us to a very stable place." We would go further: not only does the US already have the core elements, should one be so inclined, to provoke a (rather active) anti-fascist movement based on some interpretations of pro-corporatists policies adopted by the administration, but should another be so inclined, the country also has the groundwork in place for another neo-Marxist revolution: just take this chart, add some slogans, mix, and simmer. And who will be the natural enemy? Why only look at the great October revolution in Russia for ideas. History always rhymes.


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Fri, 06/03/2011 - 23:03 | 1338546 Yes_Questions
Yes_Questions's picture

Apparently I post stupid....

No, you use weapons.

Fri, 06/03/2011 - 22:28 | 1338461 gwar5
gwar5's picture

No no. Feel free to replace man with puppet if that suits. I'm pretty sure Obama will do whatever they want as long as the dear leader gets his portrait on murals everywhere. He's their man. 

The entire economy is now Ben and Tim's Excellent Adventure.  Obama is moot now that he's done his job of bankrupting us into the banksters hands. It will be interesting to see who/what will be scapegoated once everything hits the event horizon. There's always a scapegoat, and never the Fed. 

Fri, 06/03/2011 - 23:02 | 1338533 gwar5
gwar5's picture

Not sure relevance of the link.

(It was to Columbia School of Journalism reporting about the squabbles between Obam' and The Nation magazine, aka flagship rag of the socialist party of America, about minimum wages in Haiti.)

Marxism/socialism doesn't necessarily mean anti-banker btw, that's just more rhetorical bullshit. Bankers get rich funding the utopian promises and debt put upon the gullible people. When people realize it was all lies, it's the job of the little commie dictator to walk out on the balcony and announce that taxes must be raised and the beatings will continue until moral improves.


Fri, 06/03/2011 - 23:06 | 1338523 downwiththebanks
downwiththebanks's picture

Barry sucks off the Banker-Gangsters for a living, just like you gwar.

Fri, 06/03/2011 - 21:04 | 1338240 mynhair
mynhair's picture

Geez, you people worry about left-right-marxism-feudalism too much.

What is tomorrow's T-time?


Fri, 06/03/2011 - 21:03 | 1338249 bbq on whitehou...
bbq on whitehouse lawn's picture

Some of you are are in more dire need of BBQ then any i have seen.

Sit down, shut up, and eat some pulled pork. The brisket is on its way. :P

Small rock, hard stupid.  What did you think was going to happen.

BBQ is what. :) Its the small things in life that give life its next day.

Take care drink and eat your fill. For "this is our time..." Goonies.

Fri, 06/03/2011 - 21:06 | 1338261 mynhair
mynhair's picture

Sounds really good, but pressing questions remain.  Is it Weiner's weener, or not?

Fri, 06/03/2011 - 21:13 | 1338270 topcallingtroll
topcallingtroll's picture

Yes it is obviously weiner's weener. He sent the same one to my wife.

Fri, 06/03/2011 - 22:24 | 1338459 Yen Cross
Yen Cross's picture


Fri, 06/03/2011 - 23:37 | 1338620 topcallingtroll
topcallingtroll's picture

Hey dude

Sat, 06/04/2011 - 01:02 | 1338777 Yen Cross
Yen Cross's picture

 Dis-regard we caught up earlier. Been over seas, and reading threads. I appologise to the posters. Junking is a bit harsh though. Children wanting to be adults, as usual.

Fri, 06/03/2011 - 21:10 | 1338262 Monedas
Monedas's picture

By Monedas' count there are only about five real Capitalist on this blog ! Tyler is suspect ! Monedas is the supreme, mother Capitalist here and that's pretty pathetic ! Fridays are kind of fun ! Couldn't we do a Skype conference and BYOBeer ! Well, maybe coulda, woulda, shoulda degenerate into an Animal House food fight !

Fri, 06/03/2011 - 21:07 | 1338265 topcallingtroll
topcallingtroll's picture

With return on equity so low it is hard for me to believe that capital owners are making more money.

Is there someone here who understands how national income is calculated and apportioned and how capital owners could be having such a big increase?

Fri, 06/03/2011 - 21:10 | 1338273 mynhair
mynhair's picture

Whoa there TCT!  Thought we were concerned with return of capital.

Before the Libs steal it all.

Fri, 06/03/2011 - 21:13 | 1338285 JustACitizen
JustACitizen's picture

Pssst - if the "capital owners" weren't giving 10's of millions to the CEO's regardless of actual performance and/or diluting their stock/equity - I'll bet their returns would be much, much higher...<snicker>...labor...<snicker>

But you asked a valid question. I hope someone can share with us.

Fri, 06/03/2011 - 21:22 | 1338307 Reese Bobby
Fri, 06/03/2011 - 21:28 | 1338325 topcallingtroll
topcallingtroll's picture

You are right.
My data must be old.
Then why are dividends low?

Also tyler gave a link below that explains everything. I thought my extra income was extra income but it probably would be attributed to a return on capital investment.

Fri, 06/03/2011 - 21:48 | 1338381 Reese Bobby
Reese Bobby's picture

Crap.  You were nice despite my insult.  Low blow.


Fri, 06/03/2011 - 21:09 | 1338269 BlackholeDivestment
BlackholeDivestment's picture

Labor, ha!. ...something antichrists do when the light of day has fallen and darkness has come upon them?

Fri, 06/03/2011 - 21:14 | 1338274 TheSto
TheSto's picture

I'm far from a Marxist, but this is absolutely what's wrong. The good news is it can't continue like this because it will reach a breaking point. 

Fri, 06/03/2011 - 21:19 | 1338311 mynhair
mynhair's picture

Crud.  Almost dinner time, but I would like to use your post as the ? for an article.

Maybe "The Awaking of a Sleeple", or some such.

I really want to be able to post sleazy pics.

Fri, 06/03/2011 - 21:44 | 1338365 topcallingtroll
topcallingtroll's picture

I miss the hot girlie pics.

Fri, 06/03/2011 - 21:42 | 1338358 topcallingtroll
topcallingtroll's picture

History suggests it could get worse.

How about drinking the drunk prince's urine because it is the only available source of good alcohol?

Fri, 06/03/2011 - 21:48 | 1338379 Beancounter
Beancounter's picture

But Biden said the consumer is spending again!!!!

Fri, 06/03/2011 - 21:50 | 1338385 Reese Bobby
Reese Bobby's picture

Katie's restaurant has never been busier!

Fri, 06/03/2011 - 23:16 | 1338573 Yes_Questions
Yes_Questions's picture

I thought I was arcane,


Fri, 06/03/2011 - 22:30 | 1338464 Yen Cross
Yen Cross's picture

 ! Am impressed!

Fri, 06/03/2011 - 22:29 | 1338468 Yen Cross
Yen Cross's picture

 I need to pay back  some people.

Fri, 06/03/2011 - 22:35 | 1338477 A Cruel Accountant
A Cruel Accountant's picture

Labor wages will fall in the U.S. and wages in the third world will rise until equalibrium is reached an there is nothing you can do about it.

Fri, 06/03/2011 - 22:35 | 1338484 ThePhysicist
ThePhysicist's picture

Let's call this new reality "Obamanism" where the head of state claims to represent the laborer while helping the bankers strip the laborer of any and all personal wealth.



Fri, 06/03/2011 - 23:29 | 1338605 blunderdog
blunderdog's picture

That'd be giving Obama entirely too much credit. 

The ideal and practice predate his birth, you know.

Sat, 06/04/2011 - 11:38 | 1339203 Bob
Bob's picture

True, it's been a long game and full team effort, but Barry appears to have been chosen for that final shot . . . and he's dribbling full court to the opponent's basket for the game-sealing lay up.

Fri, 06/03/2011 - 22:47 | 1338511 Yes_Questions
Fri, 06/03/2011 - 23:14 | 1338575 A Cruel Accountant
A Cruel Accountant's picture

David Byrne = James Grant

Fri, 06/03/2011 - 23:20 | 1338582 vxpatel
vxpatel's picture

Anyone else spot news of this?

China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

Fri, 06/03/2011 - 23:51 | 1338655 gwar5
gwar5's picture

Yep, sure did. They're getting out of dodge alright. Though, most of the those were reported to be the shorter term Bonds.

And it was disclosed here this week at ZH that the Chinese also recently bought $59 billion in Japanese bonds ---- which confirms that the Chinese are no fools in thinking that a radioactive island nation with a 200% debt/GDP ratio is now clearly a better bet than the USA. 

Fri, 06/03/2011 - 23:39 | 1338625 gwar5
gwar5's picture

Gee, maybe people just aren't working hard enough anymore?? /s

Seriously, seems to correlate with decreased manufacturing jobs in general. Uhm, Perhaps 10% of the labor force has migrated over and been reclassified into self-employed and/or business owners (over the last 50 years with home computers, etc., this has happened).

Also, correlates with the influx of undocumented laborers which wouldn't show up in the stats -- especially in construction jobs, last ten years, when the chart really nosedives.  

At any rate, Geithner is now going to have to find a BLS app that will turn that statistical frown upside down, like the unemployment and inflation numbers.... ergo, the problem is sustainable because it's no problem at all for Timmy.

Fri, 06/03/2011 - 23:49 | 1338650 topcallingtroll
topcallingtroll's picture

I think you are on to something.

I read the background article and income attributed to capital is imputed after subtracting labor income from total.

All of us independent contractors and self employed may not have our "income" calculated in a way that it is calculated for wage earners.

I suppose i generate profits on schedule C but then distribute it all to me. That might skew the data as you suggested?

Sat, 06/04/2011 - 00:29 | 1338724 gwar5
gwar5's picture

Yeah, that's about it. I personally use LLCs because they're a pass through for rental income I can elect to pay myself passive distributions, instead of wages -- avoids SS and Medicare taxes. I can't be the only one that got that accounting advice.

A general contractor don't hire "laborers", they hire "independent contractors" usually a self-employed corporation. Which fine, because we don't have to pay their withholdings or benefits.

Also the whole computers revolution thing freed up lots of people to work out of their houses as self employed doing any number of things.

I appreciate what Tyler's chart is saying, but if the % labor income has gone down, it went somewhere, but doesn't automatically mean it all went to the bad guys. That said, I am aware that wealth distribution charts do show big spikes at the uber wealthy end of the scale. I would strongly support a one time surcharge of 50% on anything above $1 billion ---- and if that makes me a commie, then I'll willing to live with it.

Sat, 06/04/2011 - 00:34 | 1338733 FreedomGuy
FreedomGuy's picture

It will make others powerful who will become commies and then you will not return to the level of freedom you supposed.

Sat, 06/04/2011 - 08:41 | 1339017 topcallingtroll
topcallingtroll's picture

Good point.

If not done in the right way it will just increase the size of the government and cultivate a new group of people and organizations dependent on government money.

Sat, 06/04/2011 - 11:57 | 1339226 FreedomGuy
FreedomGuy's picture

Exactly, and more importantly we give up some extra amount of our freedom...and higher taxes are less freedom and we suppose once the problem or threat is solved we will get it back...our freedom. It doesn't happen. The problem is rarely solved and we don't get our freedom back. We get a new problem with new calls to surrender our freedom to solve the new problem. It is why the Federal Register is over 80,000 pages and growing exponentially.

Fri, 06/03/2011 - 23:54 | 1338660 downwiththebanks
downwiththebanks's picture

Go back to Europe, White Boy.  You land-grabbers have fucked up this hemisphere plenty.

Sat, 06/04/2011 - 00:47 | 1338752 gwar5
gwar5's picture

No, I'm American, born here. But thanks for ruining my bad reputation.

I merely meant perhaps there was a reclassification in the stats not reflected and some labor income got migrated and moved over into non-labor income. My oops.

Undocumented laborers from Mexico, now that's big different, pardner. That there is the result of illegal immigration. Git er dun.

Sat, 06/04/2011 - 01:21 | 1338794 downwiththebanks
downwiththebanks's picture

Born on stolen land and living off the sweat of others:  thief.

Sat, 06/04/2011 - 01:41 | 1338809 Fed Supporter
Fed Supporter's picture

OMG are saying the world isn't fair, I'm shocked I say shocked.
Have you ever heard of winners and losers? It has been happening for thousands of years. Except it and move on.

Sat, 06/04/2011 - 08:17 | 1339001 IdioTsincracY
IdioTsincracY's picture

I think he did 'except' it!

Sat, 06/04/2011 - 10:19 | 1339098 downwiththebanks
downwiththebanks's picture

GWAR is an historical ignoramus who seeks to justify his parasitical existence by trashing those who actually work for a living.

Because it's far easier than looking in the mirror.

And we're not talking about 'winners and losers':  we're talking 600 years of systematic genocide to enrich White Capital.

"Except [sic] it an move on" is the mantra of the person with the historical memory of a savage looking to WHITEwash.  

Sat, 06/04/2011 - 11:50 | 1339209 Bob
Bob's picture

Perhaps that's true, but when you can't bend that little bit it takes to acknowledge illegal immigration as a problem for labor due to your Grand Historical Perspective, you come across as an ideologue making no attempt at anything remotely resembling a meeting of the minds, my friend. 

Sat, 06/04/2011 - 13:56 | 1339440 downwiththebanks
downwiththebanks's picture

GWAR's "blame the wetbacks" vision of the world is hardly a good point of departure for a discussion, Bob.  

A SERIOUS analysis of immigration (and the Drug War) - especially between Uncle Sam and Mexico - requires an understanding of both past (1848) and present (NAFTA).  Should I have confidence that GWAR can engage in such a discussion?  Come on ... 

For almost 2 centuries, Uncle Sam has been gobbling up Mexico.  When NAFTA was passed in 1994, puppets sold off Mexican soil to US agribusiness, forcing thousands from their lands and into sweatshops on the border ... or over the border.

The EFFECT - 'immigrants' forced to abandon their families - are not the problem, and pointing the finger at them is to willfully ignore the cause.

That's to be expected, of course because people like GWAR serve their masters - the Banker-Gangsters running it all  - unconditionally.

Sat, 06/04/2011 - 15:21 | 1339677 Bob
Bob's picture

Yeah, that sounds right to me. 

But I think that if you demand everyone subscribe to your entire idiological "package," not too many are interested in buying. 

Sure, it's true love when they do--but how often is that gonna happen really?  You leave me, an often exhausted yet absolutely incurable liberal, grasping for rope. 

Why be that way here

I could go on, but I'm just thinking out loud after all. 

I guess what bothers me is guys like you don't last . . . and that's a damn shame, imo. 

Fri, 06/03/2011 - 23:40 | 1338626 gwar5
gwar5's picture


Fri, 06/03/2011 - 23:39 | 1338635 topcallingtroll
topcallingtroll's picture

Hey yen c
If you are still around give us some currency commentary sunday evening.

I wish you would offer some currency trade articles to tyler.

Sat, 06/04/2011 - 00:11 | 1338697 Baptiste Say
Baptiste Say's picture

"Why only look at the great October revolution in Russia for ideas. History always rhymes."


Ya, Americans can't even peacefully stop their CIA from openly smuggling cocaine and heroin into inner cities to fund their international campaign of assasinations and regime changes. They can't even stop their presidents from sending tens of thousands of young men to die in a fucking worthless desert.


Hell, they can't even vote in a candidate (Ron Paul) who is commited to ending the Fed, CIA and a wrath of other unconstitutional departments. The likelihood of a revolution is zero.

Sat, 06/04/2011 - 00:32 | 1338729 downwiththebanks
downwiththebanks's picture

The likelihood of a revolution led by a racist, bloviating old fart (R) is unlikely.

The desert isn't what has value.

Sat, 06/04/2011 - 01:18 | 1338787 Youri Carma
Youri Carma's picture

Goldman `Too Important’ for Criminal Charges…Hintz Says (Looking For A New Job At GS) – Vid

Peabody Sees `Very Low’ Chance of Goldman Being Indicted – Vid

Sanford’s Brad Hintz Explains Why There Will Never Be Any Justice In America

From a note just released by Sanford C. Bernstein & Co. Brad Hintz:

“Goldman Sachs wont face criminal precaution related to sales of mortgage linked securities because such a move could threaten the US financial system.”

Really, that’s all you need to know.

Sat, 06/04/2011 - 01:41 | 1338811 danielvisionvic...'s picture

Unions seem to be doing fine. I just posted this, I hope it doesn't get me killed by union thugs, but it needed to be said.


I thought they represented all of labor lol



Sat, 06/04/2011 - 01:55 | 1338826 slewie the pi-rat
slewie the pi-rat's picture

labor is not doing well, on paper, here.

burgeoning bureaucracies and the service econom have not been +++. 

LOL.  leading indicator of GDP? 

of course, more jobs would help, but zombie capitalism does not seem to be coming thru.  those zombie jobs cost a fortune!

Sat, 06/04/2011 - 01:56 | 1338827 tturner
tturner's picture

Government labor costs seem to be missing, wages plus benefits and retirement are substantial.

Sat, 06/04/2011 - 01:58 | 1338829 steveo
steveo's picture

Hawaii Trading pointed out these fractals last Wednesday, and predicted a
 whippy ramp followed by a sharp drop.   How true that became!   Below
the chart is the link to the original chart.

That lower orange line is like a multiyear line in the sand.   It images better than Vix alone.

Funny the VOS appears to be an amazing indicator, and yet have never had
 a single comment on it.   I guess people don't like Steroids?

Earlier post on VOS

Sat, 06/04/2011 - 03:28 | 1338892 steveo
steveo's picture

The average person gets 100, maybe 200 mSv radiation in their lifetime.   And cancer is one of the major killers of humans.


I believe that what they are saying by this video, is that, Ruh-Roh, the corium has escaped beneath the reactor building floor, and is heating and highly irradiating the water, 3000 msV per HOUR!!!!!


Once retired looking expert guy previously suggested a 50 foot deep trench all around the reactor complex, and then fill with concrete.   Very logistically difficult even in "normal conditions" with lots of cheap labor and otherwise easy working conditions.


This train wreck is nothing less than a crime against humanity.   They (TEPCO and gang) keep playing the story lines different, now the story will be ---all the damage was done in the first 1.5 hours, therefore all our later efforts were not to blame.   


It is hard to treat and guard against a continuously dispersed amount of long lived radioactive particles, which is what is happening.   A reverse osmosis system for your whole house water supply will help.   Around $2500 for raw equipment, plus installation, electrical, plumbing, space.    Long term electricity cost and occasional RO membrane replacement.   


The air should be pretty OK in the future, the Rad will accumulate in the soil, water, animals, plants.   

Food supply may be tough to deal with.   I don't know the answer.    A year or two of storage won't fix this problem.   

 Check the video here:

Sat, 06/04/2011 - 04:11 | 1338906 BlackholeDivestment
BlackholeDivestment's picture

 Chairsatan's ''Mark of the Beast'' is called that for a reason.


Sat, 06/04/2011 - 04:55 | 1338921 aleph0
aleph0's picture

Seems it was all part of the "Plan" :

From 1974 .

Sat, 06/04/2011 - 08:51 | 1339027 GOSPLAN HERO
GOSPLAN HERO's picture


Sat, 06/04/2011 - 04:59 | 1338922 e-recep
e-recep's picture

no, it is not willful ignorace. the iq of the average citizen is 100. he is not too dumb, yet he is not too smart, either. he will never understand the intricate traps banksters lay on their way. never. the banking elite is, on the other hand, very smart. banksters will always win in democratic conditions.

Sat, 06/04/2011 - 07:25 | 1338961 Urban Redneck
Urban Redneck's picture

The banking elite don't lay intricate traps, although banking has evolved per Darwin and developed effective self-defense mechanisms.  In democratic conditions, however, politicians will weave intoxicating and intricate traps to seduce voters into their self-serving false dichotomies.

IQ is meaningless.  Truth can cannot found without wisdom, wisdom cannot be obtained before experience and without education. 

In the end truth can always be reduced to - -/___, OFF/ON, Black/White.  Truth is always simplistic and usually balanced. Yet fools with high IQs are usually eager to set off on a ten thousand mile journey in order to find what is right before or behind them.  This is why the more nefarious elements within banking will endure.


Sat, 06/04/2011 - 08:50 | 1339026 Medea
Medea's picture

The black/white nature of most versions of "Truth" should be an argument against "Truth."

Sat, 06/04/2011 - 09:58 | 1339080 Rynak
Rynak's picture

+1 !

It always amuses me, how people do not notice, that things like truth are at the lowlevel based on *comparison*. Never is there something totally equal, or totally inverse... never except of in one case: coded abstractions. Example: "A" == "A"   <--- both letters are actually not identical on the screen, but that doesn't matter for encoding: If they are.... similiar enough.... they are *by convention* treated as perfectly equal, even though they are not perfectly equal.

The only reason why such a naive idea of logics can work at all in the face of reality, is because: 1. When the binary version does not work, people actually switch to "similarity". 2. For practical purposes, we don't need perfect accuracy... often, tiny differences actually do not matter.

Sat, 06/04/2011 - 11:26 | 1339187 BlackholeDivestment
BlackholeDivestment's picture

The Truth is not a choice, BITCHEZ! ...and never changes.


Sat, 06/04/2011 - 16:57 | 1339858 Urban Redneck
Urban Redneck's picture

My last paragraph reads differently but I think means the same from an eastern philosophical or western technological perspective.  I thought a black Unicode dot on white background would have been too esoteric and yin/yang too circular.  Regardless of perspective, the same observation holds true- the human mind can absorb a massive volume of facts and the analysis or truth that it arrives at is nothing more than confirmation bias, hence the hexagram yin and yang dichotomy in the original post.  Machines are faster but no better, they can analyze millions of electronic intercepts trying to find patterns indicative or terrorist behavior, and they fail just badly but more frequently then the humans who thought there were huge WMD stockpile in Iraq in 2003. 

Sat, 06/04/2011 - 06:39 | 1338948 anony
anony's picture


This makes no sense.

Everything on this planet is "Labor".

Change the headline and the content and substitute for 'labor' some other word.  Even the Wall Street charlatans and Masters of our Universe labor hard into the night, put in 80-100 hour weeks to concoct various schemes to move our money to their pockets and their debt to ours.

We need a new lexicon to account for the fact there is a galactic difference between labor that actually produces something of intrinsic value and other labor that seeks to steal the labor of others and creates vicious derivatives out of it, uses it to turn the productive members of our world into little more than slaves without benefit of a slave owner who at least knows that his slaves must be fed, clothed and cared for if he is to survive and prosper.  

Labor is not doing poorly,  it is the compensation for certain types of labor that is the garrotte around our necks.

Sat, 06/04/2011 - 08:02 | 1338991 Moe Howard
Moe Howard's picture

The answer will be clear when the current system completely fails.

Until then, the person with the most FRNs to bribe the elected representatives will make the rules.

Sat, 06/04/2011 - 08:17 | 1338999 IdioTsincracY
IdioTsincracY's picture

Unfortunately, because of many mindless trolls, this type of discussions go like this:

1) the income gap between the oligarchy and everybody else is growing exponentially

You're a commie!

2) wealth is being extracted from the middle class, destroying not just people, but the whole nation in the process

You're a socialist!

3) reaganomics and related tax cuts policies for the rich have failed, since the trickle down that was supposed to follow never happened

I hate communists!

4) America was doing just fine when the rich were taxed at 60-70%, the middle class income was actually growing, and the nation could invest in the infrastructures and programs that made the nation great.

Choke on your marxist shit!

5) The nations with the best quality of life, best educational systems, happiest people,  etc... are those that have a more balanced distribution of income (See stats and rankings of northern european countries)

Kill those socio-marxists motherfuckers!!

6) Nations would do just fine without most of the destructive financial instruments created only for wealth extraction.

Kill teachers ... burn union members!!

 .... and so it goes ..... only to intersect with occasional discussions of an economic system based on the theory of the Austrian school .... then you see fervor equal to that of people waiting for the Rapture to achieve salvation ....

It is a story of the Great being in the way of the Good .... a story of black and white, with no shades of grey...

Here we go .... we're almost there ... I see it coming .... 

Sat, 06/04/2011 - 10:18 | 1339048 Rynak
Rynak's picture

You know, i REALLY would like a platform, where there were people, who would not be like the polar fanboys you outlined above - where instead of an ideological sports game, one could discuss how to most efficiently fix actual problems, instead of how to make one's own team "win".... where people would treat economic tools and concepts as just what they are, instead of as ideological symbols.

ZH has a lot of things i strongly like about it. The ideological extremism and fanboyism around here, isn't one of them. It's a great news source, but a horrible platform to collaborate on developing solutions.

Sat, 06/04/2011 - 11:06 | 1339152 Yes_Questions
Yes_Questions's picture

It's a great news source, but a horrible platform to collaborate on developing solutions.I

Go back in time on ZH and look at some of the threads spawned out of the Fukushima Daiichi meltowns.

There will always be gutter snipes, but this forum can be a very fertile hatchery of ideas.  BTW every idea should be challenged and tested for soundness.  Don't get discouraged.

Sat, 06/04/2011 - 16:09 | 1339784 topcallingtroll
topcallingtroll's picture

One last comment on a dying thread rynak.

Your frame of reference that these problems need to be fixed and collaboration will help find solutions may not be the frame of reference of others, hence your view of people arguing rather than collaborating is a result of your insistence that they first accept the way you frame the problem.

I dont think we are at a point where we can confidently say the data shows a problem and rushing to well intentioned solutions has historically been the cause of huge problems in our country

Sat, 06/04/2011 - 08:43 | 1339023 Medea
Medea's picture

Economic analysis on ZH = Wonderful. Political and ideological analysis on ZH = Elementary School Level. Write about what you know, not what you don't.

I guess the comments section is really the worst part, but "Tyler" egged it on with his Marxism baiting. Marx has nothing to do with our situation. Try reading Marx if you reflexively think otherwise.

P.S. I am not a Marxist.

Sat, 06/04/2011 - 10:04 | 1339082 topcallingtroll
topcallingtroll's picture

Gwar and I and the above poster about debt gearing are not descending into fanboyism. We are discussing the limits of the data.

It is dangerous to make sweeping generalizationa about the dire state of labor unless one has accurate data.

Sat, 06/04/2011 - 09:32 | 1339051 kagiso
kagiso's picture

The proportion of returns to labour is easily explained, see "The Bowley Ratio":

It appears that the proportion of returns to labour is significantly associated with the debt gearing of the economy as a whole. More debt gives more returns to capital.

More at:

Sat, 06/04/2011 - 09:58 | 1339078 topcallingtroll
topcallingtroll's picture

This makes some sense. Thanks.

It is probably multifactorial.

Since return to capital is measured indirectly ( total national income minus wages) there are other factors involved.

Gwar's explanation below about undercounted illegal immigrant income plus a larger number of independent contractors and self employed people probably count as " business income" rather than wages on the irs tax return.

I basically make money on my labor but that is not how my tax return has to be structured since i am classified as a business but i dont have "wages"

Sat, 06/04/2011 - 10:05 | 1339092 IdioTsincracY
IdioTsincracY's picture

Gotta love those mathematical models!!

The way I see it is this:

  • Who benefits from debt?
  • Who benefits from casino-style markets geared to wealth extraction?
  • Who benefits from artificial financial instruments?
  • Who benefits from HFT and algo-trading?
  • Who benefits from race-to-the-bottom control standards, wages, and quality of life?

The reason mathematical models accurately describe the situation is because the whole thing is part of a well-orchestrated plan.

Sat, 06/04/2011 - 10:05 | 1339090 steve from virginia
steve from virginia's picture

Interesting but not particularly Marxist:

 - Rosenberg's chart is misleading, with its non- zero baseline.

 - He/it (the chart) does not define 'labor': government workers, defense, private sector, industrial, NFL, agricultural, undocumented ... what, exactly?

 - The USA is less industrialized than it was in 1950 or 1970. China bailed out US businesses by taking unwanted and unaffordable high wage private sector jobs. US businesses could then become what they are today: hedge funds/bank holding companies

 - A more apt chart would indentify the percentage of consumers among adults. A very high percentage no doubt but less than before the current creep of household deleveraging. Bottom line is access to credit is more important than 'labor' participation.

 - Labor force figure roughly measures penetration of automation into the workplace.

 - Hard to see the US labor force changing much as Boomers age and retire and immigrants bring small skill set. Labor participation is likely to drop further, more 'retirees' and fewer leaf-blower operators.

 - Industrial production is less remunerative for business owners. This is even true in China where margins are paper- thin. Labor costs in China push manufacturers to low- wage countries (Vietnam) and ag products are imported (from automated ag nations such as Canada and the US.)

 - An even more shocking chart would be decline in US agriculture workers. Average age of US farmers is + 60 @ less than 1% of US population are farmers.

Sat, 06/04/2011 - 10:14 | 1339097 dogster
dogster's picture

To see a dynamic model which predicts this, go to for further discussion.

Sat, 06/04/2011 - 10:19 | 1339099 The Proletariat
The Proletariat's picture

On a long enough timeline....everyone drops into the proletarian class. 

Sat, 06/04/2011 - 13:12 | 1339353 IdioTsincracY
IdioTsincracY's picture

Not true ...

Sat, 06/04/2011 - 11:11 | 1339159 RecoveringDebtJunkie
RecoveringDebtJunkie's picture

For a discussion of Marxian perspectives of material dialectics, economic value and the "realization problem" of the financial capitalist system, in the context of the future roles/values of physical gold (and specifically a critique of Freegold), check out the following articles at The Automatic Earth:

The Future of Physical Gold, Part I - Dialectic Foundations (fair warning: this part is very abstract and theoretical, not much in the way of "hard facts")

The Future of Physical Gold, Part II - The Evolution of Value

The Future of Physical Gold, Part III - The Final Realization

Part IV on the way...



Sat, 06/04/2011 - 11:14 | 1339173 Yes_Questions
Yes_Questions's picture
Labor's Share Of National Income Drops To Lowest In History

And that's the way it is, Saturday, June 4, 2011?

Good night and good luck.

See you on the radio.

Have a chairtini.

Broil a bansker.

Give it a name.


Sat, 06/04/2011 - 12:03 | 1339239 bugs_
bugs_'s picture

Keep importing more cheap labor.  Keep exporting more factories.

Marxists seem to be cool with this.  Labor's share of national income will continue to drop.

At some point we will have to cease calling it "labor".

Sat, 06/04/2011 - 13:05 | 1339336 IdioTsincracY
IdioTsincracY's picture

Are you for real?!

Sat, 06/04/2011 - 12:31 | 1339272 Spirit Of Truth
Spirit Of Truth's picture

This is where blind monetarism leads.  Printing money and pushing it into the hands of the "money changers" who then put the money to work in maximum return for minimum risk investments, e.g., commodity speculation, carry-trades, stocks protected by the Bernanke put, etc., means little money flowing to small businesses and real business investments to increase employment and enrich the working class.  So where does the "value" in the system end up?  Disproportionately in the hands of those closest to the Fed's money spigot. 

Sat, 06/04/2011 - 12:48 | 1339291 VT_Republic
VT_Republic's picture

"Although the partisans who are now fighting for the mastery of the modern world wear shirts of different colors, their weapons are drawn from the same armory, their doctrines are variations of the same theme, and they go forth to battle singing the same tune with slightly different words. Their weapons are the coercive direction of the life and labor of mankind. Their doctrine is that disorder and misery can be overcome only by more and more compulsory organization. Their promise is that through the power of the state men can be made happy."


Throughout the world, in the name of progress, men who call themselves communists, socialists, fascists, nationalists, progressives, and even liberals, are unanimous in holding that government with its instruments of coercion must by commanding the people how they shall live, direct the course of civilization and fix the shape of things to come. They believe in what Mr. Stuart Chase accurately describes as “the overhead planning and control of economic activity.” This is the dogma which all the prevailing dogmas presuppose. This is the mold in which are cast the thought and action of the epoch. No other approach to the regulation of human affairs is seriously considered, or is even conceived as possible. The recently enfranchised masses and the leaders of thought who supply their ideas are almost completely under the spell of this dogma. Only a handful here and there, groups without influence, isolated and disregarded thinkers, continue to challenge it. For the premises of authoritarian collectivism have become the working beliefs, the self-evident assumptions, the unquestioned axioms, not only of all the revolutionary regimes, but of nearly every effort which lays claim to being enlightened, humane, and progressive."


So universal is the dominion of this dogma over the minds of contemporary men that no one is taken seriously as a statesman or a theorist who does not come forward with proposals to magnify the power of public officials and to extend and multiply their intervention in human affairs. Unless he is authoritarian and collectivist, he is a mossback, a reactionary, at best an amiable eccentric swimming hopelessly against the tide. It is a strong tide. Though despotism is no novelty in human affairs, it is probably true that at no time in twenty-five hundred years has any western government claimed for itself a jurisdiction over men’s lives comparable with that which is officially attempted in totalitarian states."


But it is even more significant that in other lands where men shrink from the ruthless policy of these regimes, it is commonly assumed that the movement of events must be in the same direction. Nearly everywhere the mark of a progressive is that he relies at last upon the increased power of officials to improve the condition of men. Though the progressives prefer to move gradually and with consideration, by persuading majorities to consent, the only instrument of progress in which they have faith is the coercive agency of government. They can, it would seem, imagine no alternative, nor can they remember how much of what they cherish as progressive has come by emancipation from political dominion, by the limitation of power, by the release of personal energy from authority and collective coercion. For virtually all that now passes for progressivism in countries like England and the United States calls for increasing ascendancy of the state: always the cry is for more officials with more power over more and more of the activities of men."


Yet the assumptions of this whole movement are not so self-evident as they seem. They are, in fact, contrary to the assumptions bred in men by the whole long struggle to extricate conscience, intellect, labor, and personality from the bondage of prerogative, privilege, monopoly, authority. For more than two thousand years, since western men first began to think about the social order, the main preoccupation of political thinking has been to find a law which would be superior to arbitrary power. Men have sought it in custom, in the dictates of reason, in religious revelation, endeavoring always to set up some check upon the exercise of force. This is the meaning of the long debate about Natural Law. This is the meaning of a thousand years of struggle to bring the sovereign under a constitution, to establish for the individual and for voluntary associations of men rights which they can enforce against kings, barons, magnates, majorities, and mobs. This it eh meaning of the struggle to separate the church from the state, to emancipate conscience, learning, the arts, education, and commerce from the inquisitor, the censor, the monopolist, the policeman, and the hangman."


Conceivably the lessons of this history no longer have a meaning for us. Conceivably there has come into the world during this generation some new element which makes it necessary for us to undo the work of emancipation, to retrace the steps men have taken to limit the power of rulers, which compels us to believe that the way of enlightenment in affairs is now to be found by intensifying authority and enlarging its scope. But the burden of proof is upon those who reject the oecumenical tradition of the western world. It is for them to show that their cult of the Providential State is in truth the new revelation they think it is, and that it is not, as a few still believe, the gigantic heresy of an apostate generation." Walter Lippman 1937

Sat, 06/04/2011 - 16:04 | 1339769 topcallingtroll
topcallingtroll's picture

Very well said.

Every socialist or "progressive" should read this.

Sat, 06/04/2011 - 16:39 | 1339827 blunderdog
blunderdog's picture

Most folks, like yourself, tend to confuse "left/right" distinctions with the "authoritarian/anti-authoritarian" scale.

It's not just socialists and progressives. 

The Neo-cons and NWO representatives have forgotten Lippman too.  If you realize that already, choose your words carefully and you'll find allies wherever you look.  Not just enemies.

Sat, 06/04/2011 - 13:44 | 1339438 brew
brew's picture

Political Athiest - Unencumbered by political dogma, rigid ideology or conventional wisdom, and/or “Think for yourself".

Sat, 06/04/2011 - 14:08 | 1339498 Meatier Shower
Meatier Shower's picture

I see that as soon a the word Marxist appears in the title of an article, they all come out of the woodwork and start posting their drivel.

Tyler - The accidental pied piper of the left?

Sat, 06/04/2011 - 15:11 | 1339659 dogster
dogster's picture

To see a dynamic model which predicts this, go to for further discussion.

Sat, 06/04/2011 - 15:31 | 1339672 Dr Hackenbush
Dr Hackenbush's picture

The endemic gap between GDP and income is the natural state of technological growth and has nothing to do with Unions. A true 'Economic Democracy' would remove the relevance of unionized inadequacies that impede sustainable growth and inhibit progress.

Sat, 06/04/2011 - 15:38 | 1339730 fatalerr5
fatalerr5's picture

I see we have a believer in the Confidence Fairy 

Sat, 06/04/2011 - 16:17 | 1339772 Dr Hackenbush
Dr Hackenbush's picture

meaning that even in the best free market system, which we are far from, technological advances displace workers.  The unions push for inadequecy within that system only further serves only to keep the top down social strata in place, rather than allowing the free market to flurish by way of sustainable economic incentive .  

but I'm sure you knew all that ;)  

Sat, 06/04/2011 - 17:09 | 1339879 blunderdog
blunderdog's picture

"Technological advances" don't displace anything--development of technology is neutral.  Every job that can be replaced with a machine frees up another worker to do the stuff that machines still can't do. 

These are policy decisions made based on certain ways to employ technological advances.

Remember when you used to be able to call a technology company and talk to someone who really knew about the hardware/software you're having trouble with?  That's an industry which is largely gone, but it's not because people invented VOIP and phone-trees.  It's because businesses sacrificed long-term customer satisfaction for short-term profit increases.

Generally, "replacement" of people with automation results in loss of either efficiency or overall quality.  It's fine as long as you don't intend things to be sustainable.  And who really does?  In the long run, we're all dead.

Sat, 06/04/2011 - 21:09 | 1340283 Dr Hackenbush
Dr Hackenbush's picture

By definition, the whole purpose of automation is to streamline and allow producers to 'get closer' to the consumers and eliminate the middle man, which allows for cheaper goods and services.  Surely you don't believe the uber rich do not exploit this.  Yes, this has freed up workers - lol  - those with jobs have found their purchase power has dwindled, despite the hyper-consumer push towards lower prices and push towards global producers. 

But alas, in the interest of brevity, I over simplified the case for the gap in wages vs GDP - and did not develop it fully. To be clear, the causation of the gap is intertwined with i) Neoliberalism ii) broken monetary system iii) Automation. 

Regarding the long run. Symptomatic to the rise in technology is the systemic isolation that leads to the belief that our personal experience is all that exist in reality - ultimately we all die in vein.  

I do not subscribe to that belief system. 

Sat, 06/04/2011 - 21:33 | 1340350 blunderdog
blunderdog's picture

the whole purpose of automation is to streamline and allow producers to 'get closer' to the consumers and eliminate the middle man

Not sure I'd go this far, but I appreciate the point you're raising.  I'm thinking, more generally, the purpose of automation is to replace labor (acts which require people) with capital (machines/processes/etc).

Getting closer to consumers is one of those platitudes that's spouted a lot, but most profit-enterprises are really more interested in controlling the basis of exchange.  At the moment, for example, I'm working for a service provider.  Most of management's focus is on designing our "relationships" with the people/organizations who pay us so that we control exactly what we deliver and (basically) eliminate feedback and time spent on conflict resolution.

I read someone (years ago, don't recall who) who was big on distinguishing between the "customer" and the "consumer."  The customer is someone you want to develop a relation with.  The consumer is someone who you just want to extract money from.

Businesses focused on *customers* will do well, provided they can maintain a profitable margin.  They actually benefit from employing human beings who can improvise and make decisions and improve the contentment any given customer has with each transaction.

Businesses focused on consumers will do well only until they have alienated their consumer market, and then they're done.  Their elimination of human interaction (thus labor cost) can produce very high margins, but only for relatively brief periods, before the profit model is refined by another organization and gains increased share of the market.

Think about any of the unsatisfactory business dealings you've had in the past year, and ask yourself: would "automation" have helped reduce your dissatisfaction?  Or would you have preferred a personal interaction with someone who might make a change you requested?

I think a big part of our problem with "how society works" today is that the social and human costs aren't assessed properly.

Sat, 06/04/2011 - 15:36 | 1339701 fatalerr5
fatalerr5's picture

I'm sorrry, but who wrote this trash?

The information is sound but the injection of political terms to distort why this might happen is dangerous and dishonest.


You should know better, your BS will not prevent it from happening if it does.


What might happen has NOTHING to do with Marxism or Secularism.

Sat, 06/04/2011 - 17:16 | 1339888 swissbene
swissbene's picture

i do not understand labor share metric so tried to recreate on recommendation in nov 2004 cleveland fed paper.  i was unable to do this. note the same paper points to several problems with the metric and suggests alternative methodologies that yield different results.

next simply look at BEA US income stats 2000-2010 [ table 2.1].  summary:

[category, cagr, 2000 share of income, 2010 share of income]

total income, 3.9%, 100->100

wages/salary, 2.9%, 56->51

.. public sector, 4.3%, 9->9

.. private sector, 2.6%, 47->42

supplemental comp [eg employer pension, insurance contributions], 5.1%, 11->13

dividends/interest, 3.4%, 16->15

sole proprietors, 2.6%, 10->8

govt transfers, 7.8%, 13->18

consumption, 4.2%, 83->85

personal taxes, -0.6%, 14->9

ignoring the complexity of the miracle ratio methodology for a moment:

- wages down, but not in govt

- plenty of consumption and lower taxes

- dividends/interest decline as share of national income

- transfer payments!  18% of income!

- sole proprietor income down

this does not say too much to me that i did not know already.  us government and transfer programs are running the show.  of course this is widely reported and discussed on the site and should come as no surprise.  i am a bit surprised by the dividend income - no fuel for the fire here.

you may argue the bea stats are weak/incomplete - i agree.  the so called labor share of income is a fucking joke however, and has been torn to shreds by economists repeatedly since the 1950s.  

perhaps the reason people are not in the streets to fix a real problem eg trade policy, monetary policy, etc is that 18% of their income comes via govt and the ability to identify/think/discuss/resolve real problems has been subsumed by absurd public media & discourse.

in particular the extrapolation from a small set of criminal bankers that clearly need to be reformed by society to broad attacks on capitalism are misguided at best.  similarly the need for a strong social contract is reasonable/desirable not radical.  my guess is reasonable compromises may be found on hard issues but we are instead using hyperbole and talking about absurd metrics that most [self included] do not understand/find useful.

prior to the revolution, suggest reading the 04 cleveland fed linked before:

alan kreuger wrote a good paper on methodology and alternatives:

also IMF paper on trade policy relationship to labor share of income [useful concepts but some questionable methodologies in my view]:

among other things, these point to weaknesses in assuming local equilibrium will be sustained over longer periods that is at core of current methodology, philosophical questions around what is capital and what is labor, the inability of current method to accommodate individual proprietors, government transfers, and government -- these categories should be familiar from the 10 year summary above.

Sat, 06/04/2011 - 22:47 | 1340473 double 007
double 007's picture

Tue, 06/21/2011 - 18:07 | 1390545 jabhagsb
jabhagsb's picture

This drop in share of labor is driven mostly by the phenomenon of "technological unemployment."  Computers and robotics are eliminating the need for a good portion of manual labor and this trend will only accelerate as technology advances.  Not a good sign for the jobs picture and all the more reason we need a new economic and political model.

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