'Screw the Market! Socialism to the Rescue' says London's Major

[Lawrence of Arabia]

You said that 70% of wealth comes from wages, not that 70% of income goes to wages.

you're right, vocabulary mistake

nah, the graph I have goes from 1960 to 2000 and has a single red line (not a best fit line, but no wild fluctuations.) the blue graph is a little misleading since its y scale covers only 5 percentage points. also right before 1970 according to my graph the share of labor income was at its highest in the graphs period, so having that as a starting point of a best fit line will have an impact on the slope of the line. the blog says that since 1970, we have seen a decrease of 2% in the labor share, but if you bring the analysis back to 1960, there has been no change in its share over the last 40 years.

i still don't understand why we wouldnt include depreciation?

[Lawrence of Arabia]

heres an interesting working paper

http://www.clevelandfed.org/research/PolicyDis/No7Nov04.pdf

[Kidlicious]

Originally posted by Lawrence of Arabia
i still don't understand why we wouldnt include depreciation?

Yeah the physical capital is not owned by the employees, but economists always do things differently.

[Kidlicious]

LoA,

You might find interesting. Since economists only care about the part of entreprenuers income that motivates them to invest they tend to disregard depreciation. In this case that's definitely the wrong thing to do and they are coming up with misinforming data since the purpose is to show what share of income goes to workers.

This is like a husband claiming that he has a lower share of the family income than the wife because he has a more expensive car that depreciated more.



Eldon Hendrickson, Accountant at UC Berkeley