Guest Post: More Government, Less Wages

Tyler Durden's picture

Submitted by John Aziz of Azizonomics

More Government, Less Wages

Yes; correlation does not prove causation. Yes; there are lots and lots and lots of other factors involved — the end of Bretton Woods, globalisation, deindustrialisation, the birth of the computer and the internet, financialisation, the United States’ growth into a global imperial power and more recently the beginnings of a decline.

But whatever the exact causality this does not make happy reading for those who lean toward the idea that more government involvement in the economy translates to a bigger share of the pie for the working class.

Quite the opposite — while wages have just hit an all-time low, corporate profits have just hit an all-time high:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
unununium's picture

Both scales are percentages, so why not put both plots on one scale?

smlbizman's picture

ot. appears that no more comments are allowed at marketwatch....

LowProfile's picture

Who gives a fuck about Marketwatch, again?

On topic:  How surprising that if gov't gives money to corporations, they have more money, but the people who provide that money (tax slaves) don't?


nmewn's picture

Lets turn to our prevaricator in chief for some real answers...

"The truth of the matter is that, as I said, we created 4.3 million jobs over the last 27 months, over 800,000 just this year alone."

First off, what do you mean by..."we"? Is that we, as in you (in government) or we out here trying to live, work, create jobs and raise families?

And would those numbers be gross or net jobs?...they're gross aren't they?

"The private sector is doing fine."

At who's expense and by what measure? 

Are we speaking about publicly traded companies where one person does the work of five as board members are issued stock that they dump into a stock market as soon as it vests which is propped up by state permitted algos?

"Where we're seeing weaknesses in our economy have to do with state and local government. Oftentimes cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in."

By flexibility you mean destroying the currency people accept as their wages by just issuing more debt & printing more money...right?

So your solution is for us to allow you to print more in order give more to those who didn't really earn it and to hire more state & local government workers to oversee it all who can't be supported through the tax base already.

Oh, thats just fucking brilliant.

knowshitsurelock's picture

Bingo.  The Public Sector has grown exponentially in the last five years with the average "do nothing" bureaucrat bringing in about 120K a year.

The private sector is working to barely survive, while one worker does the job of four, lives on less than 40K a year for a family of four, and owes more in taxes and interest on debt that can't possibly ever be paid.

This poor overworked and underpaid guy is supposed to support that bureaucracy which is destroying his job, destroying his paycheck, destroying his family, destroying his health, destroying his marriage, and LOVE it.

So, he is just supposed to keep his mouth shut, run happily on his hamster wheel, pay taxes and vote.

What a crock.

economics9698's picture

The literature on the relationship between the size of government and economic growth is full of seemingly contradictory findings.

This conflict is largely explained by variations in definitions and the countries studied. An alternative approach - of limiting the focus to studies of the relationship in rich countries, measuring government size as total taxes or total expenditure relative to GDP and relying on panel data estimations with variation over time - reveals a more consistent picture.

The most recent studies find a significant negative correlation: An increase in government size by 10 percentage points is associated with a 0.5 to 1 percent lower annual growth rate.

We discuss efforts to make sense of this correlation, and note several pitfalls involved in giving it a causal interpretation.

Against this background, we discuss two explanations of why several countries with high taxes seem able to enjoy above average growth: (i) that countries with higher social trust levels are able to develop larger government sectors without harming the economy, and (ii) that countries with large governments compensate for high taxes and spending by implementing market-friendly policies in other areas. Both explanations are supported by current research.

economics9698's picture

The government sector, federal, state, and local, has grown from 26% in the 1950s to 42% today.

Offthebeach's picture

From 1600's to 1901( ish ) total gov tax, fed/state/local take was under 10%. We conquered the wilderness, built ever house, farm, city, port, railroad, mills, foundries, mine, canal, factory.
Up until FDR the combined take was around 15%. Buisness began to flee the industrial north.
After FDR, citizens began to flee their great cities, built by their grandfather's. Buisnesses flee the nation.
Now people talk of fleeing America and its high cost of government, which can not be supported by citizen taxes anymore, but must by printing and foreign governments.

AldousHuxley's picture

public sector didn't get better....they just kept their labor agreements throughout the years of outsourcing, union-busting, 401k no match retirement plans, at-will employment in the private sector.

private sector got worse.


private sector became SO BAD that it is worse than public sector.


average household income should be $90k inflation adjusted. private sector gave up $30k because they thought they were capitalists and voted for anti-labor politicians. ALL the good jobs have unions idiots....doctors get half of their money from government, pilots get government training, lawyers get power from government, etc.....



private sector is exploited so much by the oligarchy that government jobs look better in comparison......


Also, in Japan, the best of the best want government jobs!!!!! imagine that after lost decades, outsourcing, job -insecurity, loss of benefits, no over time, etc.

Shizzmoney's picture

And half of that bureaucracy is run by Wall St banks (i.e. JPM and the issuing of EBT cards).

smlbizman's picture

let me tell you who gives a fuck....they shut opinion you can no longer show the author is spreading bullshit....i dont use the sight except for a quick chart...and i have recently noticed the sheep on those sights based on their comments are starting to get you and everybody should give a fuck...or will you only give a fuck when they shut our hedge down?

LowProfile's picture

I won't give a fuck if/when they shut ZH down except that it will be the signal to disappear.  By then it will have done it's purpose, and will come back if there is a purpose for it.

Marketwatch, Yahoo Finance, etc. are MSM muppet manipulators.  Fuck anyone who is too willfully stupid to make investment decisions off a bunch of obvious lying sacks of shit, and fuck anyone who believes the gov't after 60 years of outrageous lies and crimes against it's own citizens.

stewmint's picture

How long until ZH gets shutdown? 2 yrs? 3? Is that time period too kind?


malikai's picture

ZH won't get shut down. It is far too valuable for "intelligence gathering".

GCT's picture

Now the MSM is telling the people to get a job they must have a facebook account or they are hiding something.  What a joke.  Now he people will all rush out and get an account.  We were laughing and discussing how the MSM manipulates people into thinking Facebook will now equal a job.  You just cannot make this crap up.

Most HR people I know could care less about facebook!

Tertsok's picture

Marketwatch is just full of programmatically written content anyways.

El Oregonian's picture

Are prisoners who are now in our prison system and work for .60 cents an hour, considered "Gov't Workers" so that the aggregate wages for all government workers now lowered as a result?

So the more and more people that are convicted of "Crimes against the State" and funneled into the system would continue to suppress overall wages?

SafelyGraze's picture

where's that list of the top 400 wealthiest people in the u.s.

Hype Alert's picture

Wages definitely took a turn downward in the 70's.  Gold standard disconnect?'s picture

The closing of the gold window and the off shoring of jobs go hand in hand.

Adam Smith used the phrase "invisible hand" not to describe general market action but rather to describe the unconscious action by which individuals support domestic industry over foreign industry. Note that this effect only occurs in economies which use sound money. The modern US dollar standard actually encourages off-shoring as there is no desire to maintain wealth within a nation if that wealth is denominated in debt backed currency units.


But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

economics9698's picture

Hype Alert...the three drivers of lower wages are;

1.  More government, larger transfer payments coming out of paycheck.

2.  No immigration laws and 20 million illegals.

3.  Inflation transfers wealth to recipients of the counterfeit cash and capital owners.

AldousHuxley's picture

but underlying all of those drivers is one critical factor....


easy credit to dupe wage earners think that they have not been sold out.


but now we know.....and the whole world knows too.



The slaves have found the caps lock key. There's going to be hell to pay.

Encroaching Darkness's picture

"By preferring the support of domestic to that of foreign industry,..." The endless rigged casino aspect of the US stock markets, and the lack of accountability of Corzine et. al. for their crimes (which in itself constitutes a crime by Holder et. al. and Gensler et. al.) has driven me to diversify abroad; in one account of 45 positions, fully 20 are XXXXF holdings (in foreign securities). Canadian junior miners and similar elsewhere are volatile, but I'm not convinced the foreign stock exchanges are as corrupted as the US ones (yet). No mutual funds, no ETFs, no MMs, just real companies that make real junk, dig real holes in the ground and create real value. Two financials (AOD and CXS) which actually invest and make money somehow (for their dividend cash flow). Why buy Freakbook and MyTrace and waste capital? I just don't understand how either stays in business, so I didn't get involved in these social media IPOs. Then again, I'm not rich (yet), so YMMV.

ejmoosa's picture

One should not discount the imapact of the increase in size of the labor force as women entered the picture.


Families needed more income>>>>>>Moms went to work>>>>>>Wages declined>>>>>>Families needed more money>>>>>More moms went to work>>>>>Wages declined further>>>>>and so on....

AurorusBorealus's picture

You have the cart before the horse I am afraid.  Women went to work... increasing the supply of labor and driving down wages... which forced more women to work to support a family lifestyle... which drove down wages further.'s picture

Another effect of women entering the workforce was that work which had been undertaken outside the control of taxmen and bankers came under their control when services such as child care and food preparation were taken over by day care centers and restaurants. "Women's work" performed outside the home for profit could then be denominated, tracked, taxed and borrowed against. The elites scored big on women's liberation as it allowed them to extract a percentage from forms of labor which had been previously untouchable by them.

Anusocracy's picture


Cast that tax net wide, haul in the tax slaves, extract their wallets and send them to the IRS Processing Plant.


GCT's picture

And now women are dying from what used to be men ailments.  The whole concept was to get women to work to increase the tax base and further devalue the dollar.  We must have growth!

Shizzmoney's picture

On top of that, women "tow the line" and tend to be more unconditionally obedient (unless they are fucking you).

That's why women tend to be human resources people or middle managers - a male slave is less likely to snap back and have a "clubhouse moment" with a woman than a male. "Politically correct" is really just another term for "censor yourself". 

Yet, women aren't the majority of CEOs, Executive boards, because it is still a man's world.  The women-to-male wage differencial, proves that.

LMAOLORI's picture




" while wages have just hit an all-time low"


Thousands of federal retirees collect six-figure pensions

crawldaddy's picture

stop being mindfucked.  Think about this.


400 americans have more wealth than the bottom 50% of all america COMBINED.  4 fucking hundred. 


400, more wealth than 150,000,000 combine.


One more time for the slow.  take all the wealth of 150 MILLION americans, add it together,  the top 400 rich pukes have more.... you getting this yet??


Focus on the 400 

Lednbrass's picture

It has nothing to do with being mindfucked, making the argument that 20 fleas taking 1/20 oz. of blood each from my ankle isn't as bad as one leech removing 1 oz. from my neck is silly.

All the parasites need to go, the middle class hosts need both groups to die off. Are you getting this yet?

crawldaddy's picture

you dont get it, its not a 20 to 1 ratio?  the 400 are like one vampire sucking you dry and killing you. meanwhile THEY DO LITTLE TO NOTHING FOR YOU.  Meanwhile your new mindfucked induced boogeyman ( the public worker), actually teaches your kids, are willing to die for your safety, cleans your streets, builds your roads, etc etc


You are indeed MINDFUCKED

nmewn's picture

So, do you hate Soros or the Koch's more?

crawldaddy's picture

fuck em all, Christ you think anyone of them gives a rat's ass about us.

nmewn's picture

How many millionaires did Bill Gates create?

LowProfile's picture

Doesn't matter how many.  It doesn't make up for the thousands of women he helped sterilize without their knowledge or consent.

crawldaddy's picture

FUCKING NONE...  demand for a said product or service creates prosperity, not people.  Learn your history asshole, it was actually Xerox that created the windows/OS operating systems of today.  Apple and Microsoft "borrowed" it from a naive Xerox.


Christ Im so tired of stupid people. DEMAND creates jobs, not rich fuckers.

nmewn's picture

Wrong, asshole, over 10,000.

And if no one is there to fill the demand there can be no prosperity for anyone, correct?  So I will assume Xerox could prove their claims, sued and won?

On a lighter note...after much searching, I've found a small business that Obama-Biden is helping out ;-)

The Crumb & Get It sure to click on the video.

Lednbrass's picture

Teachers, streetcleaners, police, and road crews are state employees, not federal.

You are aware of the three tiered governmental structure in the US, yes?

Offthebeach's picture

They should all be privatized.'s picture

Privatization implies that the government should collect funds for such services and distribute it to providers in the private sector. It would be far better to let individuals retain their earnings and obtain the services which they desire on a free market basis.

LowProfile's picture

I think I agree.  IMO privatization implies the community raises funds however they see fit and bids it out.'s picture

Just saying that privatization is one of those words which has been co-opted by hypocrites and so is no longer available in an unsullied interpretation by those who actually mean what they say. It's similar to the way the words capitalism and freedom have been perverted to mean the opposite of their true definitions. It's difficult to stay ahead of the propagandists and their distortion of language.

Anusocracy's picture

Nothing you mentioned HAS to be done by the government.

Trillions stolen, trillions destroyed, hundreds of millions killed.

Government, what is it good for?

Absolutely nothing!

A Nanny Moose's picture

War. It's what government does best.

Colonel's picture

Government = violence. Pure and simple. If you like violence then vote for more government.

knightowl77's picture

Forget the 400. Focus instead on the politicians and TPTB that created the rules & the conditions which allowed the 400 to prosper at the expense of and on the backs of others.

Destroy the rules that have perverted the system, restore it to the beginning. Stop the government from picking winners and losers.

Limit the government, tie it down, restrain it.

I do not care 1 whit how much others acquire, as long as I am free to do as I choose without government interference, as long as I do no harm to others.