The Big Squeeze

The "big squeeze" of statism shows that, as you drift away from capitalism toward a welfare state with concentrated power and centralized resource allocation, you get more jobs at less pay.

Private sector workers used to be able to allocate well over 40% of national output--when they were earning well over 40% of national income. Currently, they earn (and allocate) less than 37% of national income.

Red Line = Healthy situation where private workers allocate over 40% of income/output

A critic may then retort that robots are putting people out of work and that we have--or are approaching--the dystopic future depicted in the 2008 Pixar movie, Wall-E.

If the number of full-time equivalent jobs in the private sector was falling while the share of national income going to them was also--then the "Robots ate my job!" claim could possibly be true.

But let's check the change in proportion of population employed, to see if it fell right along with the income share going to the employed ...

More jobs than ever before. Red Line = a full-time job for every 3 people.

Nope! There are more jobs than ever before, even while "non-Great Recession" pay is at a lower share of GDP than ever before. We're individually working harder and harder for a lower and lower share of GDP.

This is the "big squeeze" and it is akin to feudalism--where unemployment is really low (most people work), and pay is low as well (most people do not have a choice to retire).

What made it so that we no longer have the choice to retire? Welfare statism. Welfare statism kills productivity growth and investment prospects, leading to a lower affordability of living standards.

To live as well as your parents did then requires that you work harder than they did. Note that--as if on a treadmill--you are working harder, just to stay in the same place.

To restore wage power in America (where we have the option to retire), we must shrink government in America--so that the disbursed, decentralized resource allocation creates productivity growth and investment prospects.

A good suggestion--one which would fix the half-century problem of declining wage power in America--would be to return to the decade-average government spending levels of the 10 years from 1929-1938.

For those 10 years, federal spending averaged less than 7% of GDP and the sum of all state/local government spending averaged less than 9% of GDP (so that the share of GDP allocated by the private sector was over 84% of GDP).

A problem exists in that there are stakeholders deriving a lot of benefit from the status quo and--as they stand to lose some of their current income/power if government downsizes--they may attempt to derail these forward-looking ("caring about the future of America") efforts at reform.

Sources

IMDB entry on 2008 Pixar movie, Wall-E [https://www.imdb.com/title/tt0910970/]

U.S. Bureau of Economic Analysis, Full-time equivalent employees: Domestic private industries [A4303C0A173NBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A4303C0A173NBEA

U.S. Bureau of Economic Analysis, Gross Domestic Product [GDPA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/GDPA

U.S. Bureau of Economic Analysis, Population [B230RC0A052NBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/B230RC0A052NBEA

U.S. Bureau of Economic Analysis, Wage and salary accruals: Domestic private industries [A4103C0A144NBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A4103C0A144NBEA