Why is FAIR TRADE better than FREE TRADE?

[Loren Pechtel]

We are not talking legalities. This is about market value. The figures provided show that workers are not getting a fair share of the wealth they generate. That the top end of town continues to grow they wealth is a symptom of this imbalance.

All you are saying is that you wish that workers market value was higher than it really is. I'm sorry, but it isn't. If you manipulate it, we'll get a bunch of weird following effects that may hurt the overall economy.

Again, given the figures (provided), workers are not getting paid their worth in terms of wealth generated. Not even close.

Try again without the word "fair"--it's subjective, everyone has their own definition and thus it doesn't belong in this argument.

 

[Loren Pechtel]

A balance of both is needed. Minimising pay for workers is not a balance of labour and capital.

Again, Marxist fantasies. The market is like a force of nature. If the market doesn't work the way you'd like, tough luck. Capitalists will always pay workers as little as they can get away with. That's in order.

Messing with this rarely ends well. The system I prefer is flat taxes and just giving the poorest money automatically. It keeps all the incentives intact.

You're going too far in the other direction. We need both labor and capital. What the left fails to understand is that an increasing percentage of the pie is going to the tooling that makes workers more productive.

 

[Loren Pechtel]

If workers join together in order to get a better deal they are capitalizing on their strength in numbers.
By doing so they balance (to some degree) the advantage that employers over individual workers. Unions secure better deals for workers. Proven without a shadow of doubt.

If workers join together in order to commit extortion of course they benefit. If the state won't prosecute crime of course the criminals benefit!

 

[ZiprHead]

A balance of both is needed. Minimising pay for workers is not a balance of labour and capital.

Again, Marxist fantasies. The market is like a force of nature. If the market doesn't work the way you'd like, tough luck. Capitalists will always pay workers as little as they can get away with. That's in order.

Messing with this rarely ends well. The system I prefer is flat taxes and just giving the poorest money automatically. It keeps all the incentives intact.

You're going too far in the other direction. We need both labor and capital. What the left fails to understand is that an increasing percentage of the pie is going to the tooling that makes workers more productive.

No, the evidence shows that an increasing percentage of the pie is going into the pockets of the already wealthy.

 

[DBT]

If workers join together in order to get a better deal they are capitalizing on their strength in numbers.
By doing so they balance (to some degree) the advantage that employers over individual workers. Unions secure better deals for workers. Proven without a shadow of doubt.

If workers join together in order to commit extortion of course they benefit. If the state won't prosecute crime of course the criminals benefit!

It's not extortion. It's a balance of power. As it stands, it is the employer who has the power to set wages and the employee who has no choice but to either accept or have no income. That is extortion.

 

[DBT]

A workers worth is measured by the wealth their labour generates. Workers are not getting their fair share of the wealth they generate....which is flowing rapidly to the high end of town.

Workers are exploited because there is a power imbalance between individual workers and the employer. Which is why unions were formed in the first place.

This reads more like a leftist position piece than actually addressing the issue.

Nothing to do with leftist ideology. You must be aware of the horrendous hours, pay and conditions set at the beginning of the industrial revolution, which was the reason why unions were formed. What are workers to do? Struggle financially, work long hours for a pittance while watching others, management, CEO's, etc, getting ever more wealthy? Is that the kind of society you argue for?

 

[Loren Pechtel]

You're going too far in the other direction. We need both labor and capital. What the left fails to understand is that an increasing percentage of the pie is going to the tooling that makes workers more productive.

No, the evidence shows that an increasing percentage of the pie is going into the pockets of the already wealthy.

Relying on the flawed model of assuming the pie is being divided into two. In the real world there are three portions!

 

[Loren Pechtel]

If workers join together in order to get a better deal they are capitalizing on their strength in numbers.
By doing so they balance (to some degree) the advantage that employers over individual workers. Unions secure better deals for workers. Proven without a shadow of doubt.

If workers join together in order to commit extortion of course they benefit. If the state won't prosecute crime of course the criminals benefit!

It's not extortion. It's a balance of power. As it stands, it is the employer who has the power to set wages and the employee who has no choice but to either accept or have no income. That is extortion.

The two aren't incompatible.

"Give us money or we wreck your business" is extortion. Whether it's done by outsiders or employees doesn't change that.

 

[Loren Pechtel]

A workers worth is measured by the wealth their labour generates. Workers are not getting their fair share of the wealth they generate....which is flowing rapidly to the high end of town.

Workers are exploited because there is a power imbalance between individual workers and the employer. Which is why unions were formed in the first place.

This reads more like a leftist position piece than actually addressing the issue.

Nothing to do with leftist ideology. You must be aware of the horrendous hours, pay and conditions set at the beginning of the industrial revolution, which was the reason why unions were formed. What are workers to do? Struggle financially, work long hours for a pittance while watching others, management, CEO's, etc, getting ever more wealthy? Is that the kind of society you argue for?

I believe the unions are mostly taking credit for things that would have happened anyway. The horrendous working conditions were a result of a surplus of workers and a lack of capital. Furthermore, the law has done away with most of the worst abuses.

 

[ZiprHead]

You're going too far in the other direction. We need both labor and capital. What the left fails to understand is that an increasing percentage of the pie is going to the tooling that makes workers more productive.

No, the evidence shows that an increasing percentage of the pie is going into the pockets of the already wealthy.

Relying on the flawed model of assuming the pie is being divided into two. In the real world there are three portions!

I never said anything about only two portions. You're deflecting from the fact that the wealthy are taking a larger portion of the pie and it's coming from the worker's portion.

 

[DBT]

It's not extortion. It's a balance of power. As it stands, it is the employer who has the power to set wages and the employee who has no choice but to either accept or have no income. That is extortion.

The two aren't incompatible.

"Give us money or we wreck your business" is extortion. Whether it's done by outsiders or employees doesn't change that.

Who, besides you, is saying "give us money or we wreck your business?"

Wrecking the business that employs them is not in the interest of workers.

The point is workers sharing in wealth that they help generate....a share based on true market value based on productivity. Everybody still benefits, everyone does well, the workers, management, the business and the economy.

 

[DBT]

Nothing to do with leftist ideology. You must be aware of the horrendous hours, pay and conditions set at the beginning of the industrial revolution, which was the reason why unions were formed. What are workers to do? Struggle financially, work long hours for a pittance while watching others, management, CEO's, etc, getting ever more wealthy? Is that the kind of society you argue for?

I believe the unions are mostly taking credit for things that would have happened anyway. The horrendous working conditions were a result of a surplus of workers and a lack of capital. Furthermore, the law has done away with most of the worst abuses.

Pay and conditions have been eroding away for decades....so no, it would not have happened without collective bargaining.

 

[Lumpenproletariat]

In real-world examples, FREE TRADE makes everyone better off, while FAIR TRADE makes them worse off.

lower cost of production = lower price (for the same production) -> consumers / everyone made better off

Lumpen is not really a "free trader" - Lumpen is "the lowest price to consumers for a given level of quality is best" trader.

in other words, "pro-competition" trader. Same thing.

That's what everyone is, unless they're against antitrust law. Antitrust law is based on the premise that companies should compete in order to bring the price down to the lowest level possible, while still insuring that the companies have incentive to produce at the highest possible level (including higher quality) for consumers. I.e., more competition -> increased production and lower price. Or "the lowest price to consumers for a given level of quality is best" = Economics 1A.

His/her argument ignores that "fair trade" may, in fact, be a mutually agreed-upon legal agreement between buyers and seller - the very definition of free trade.

But that's not generally what "fair trade" means. Our topic is about cases where "fair" and "free" are NOT the same but are contrary, and the question which one is better. And the answer is that free is better because it allows any seller, including wage-earner, to try to undercut the other sellers, or compete with them, in order to attract a buyer, or get hired, which is always better for the economy, because more competition (absent crimes being committed) is always better, and you can't name any case where it's not better.

Our topic is about cases of free trade which are NOT "fair" -- such as Trump's complaint that China and other countries are not "fair" and so it's necessary to intervene to stop them from cheating and stealing jobs from red-blooded American workers. It's also about pressuring companies not to sell products made in sweatshops (which are not "fair"), and even trying to get laws passed to prohibit such production, or impose conditions onto those producers which would make the production more expensive, or to restrict or shut down those companies. In other words, it's about reducing the competition -> higher prices = contrary to the principles of economics upon which antitrust law is based.

For all examples where "fair" and "free" trade are contrary, it's "free" trade which is better, as in the above examples, because more competition is always better, and you can't give any example where less competition is better, or where "fair" trade is better than "free" trade. If you can't give any examples, it proves you're wrong. You have to give examples in the real world rather than just give abstractions.

In fact, if one actually thought about it (which may preclude Lumpen), laws constrain the scope of trade and treatment of labor, which may, in Lumpen's terminology, make some wages "artificially high".

Of course. Just as wages were made ARTIFICIALLY LOW centuries ago by laws which imposed maximum wage laws onto employers, making it illegal to pay workers above a certain level. That's not ARTIFICIALLY-LOW wages? How was it not "artificially-low" wages when they punished employers who tried to increase wages in order to attract needed workers? The result was that companies were unable to hire all the workers they needed and some of the production did not get done, so that with less production there was a lower standard of living and the whole society was poorer. That was ARTIFICIALLY-LOW wages, was it not? And it was wrong, just as ARTIFICIALLY-HIGH wages are wrong for the same reason -- because they prevent needed work from getting done -> less production -> lower standard of living.

Just as stupid back then, and bad for the economy, as artificially-high wages today, which also cause lower production as a result.

Again, abstractions not related to the real world don't prove anything. Give a real example where artificially-high or artificially-low wages produce any benefit for society. You can't give any real example. You can't give any case where a net benefit is gained by forcing up the wage level or forcing it down, from the level mutually agreed to by the individual employer and worker.

Narrowly viewed, "the lowest price to consumers for a given level of quality is best for consumers" is true when one focuses solely on people as consumers.

No, not "on people as consumers" -- Rather, "the lowest price . . . is best . . ." is true when one focuses on what companies are supposed to do, or what their function is, or their role in society. And what they're supposed to do is serve consumers. The lowest price for the same quality is correct, and this must be the focus for policing business.

Which is what antitrust laws are about. What are companies supposed to do if not serve consumers? Why should companies ever charge consumers a price higher than that determined by competition, or supply-and-demand? What other function of business is there except to serve consumers? What is the point of the business, its product or service, other than to serve consumers? the customers? And what matters other than to make the business do this function better, or to improve its performance of this function?

What is the function of business if not to serve consumers?

What does "when one focuses solely on people as consumers" mean?

One way or another, this phrase ends up meaning "jobs! jobs! jobs! jobs! jobs! jobs! jobs!" or Trump's crusade to "bring back the factories" or "bring back the jobs from China" and other babble nonsense. No, "jobs! jobs! jobs! jobs! jobs! jobs! jobs!" is not the function of business. Not even Bolshevik Bernie's "good-paying jobs! good-paying jobs!" chant.

On the contrary, sometimes business has to eliminate jobs because the function is done better, cheaper, by robots or computers. And also it has to sometimes reduce wages because of the excess supply of workers, making them less valuable and thus the work could get done at lower cost. It's good for the business to do this -- eliminate jobs or reduce wages (when dictated by supply-and-demand) -- and you can't name any case where this is not good, because the whole society benefits, i.e., ALL CONSUMERS benefit, and benefiting all society overrides the benefit of artificially-higher wages to a small number of uncompetitive workers whose market value is decreasing.

If the consumers are also workers whose wages are so low so that the lowest prices means they live in poverty or starvation, then it . . .

But "the lowest prices" cannot mean someone lives in poverty or starvation. Whoever is in poverty or starvation is not there because of any low prices.

The phrase "that the lowest prices means they live in poverty or starvation" is self-contradictory. There's no way that low prices can mean someone lives in poverty or starvation -- or, there's no way the low prices can cause poverty or starvation. And increasing the prices can only mean increasing the poverty and starvation, never decreasing it. Making the impoverished pay higher prices can only increase their impoverishment. Even if you assume certain workers get paid more in the process (for the same work, or same performance), the higher prices can only mean a net increase in poverty and starvation overall, because the higher prices hit ALL consumers, all the poor. Just because you make certain select workers better off does not change the fact that you're making most people worse off by increasing the prices (without any increase in production, or in performance).

If you imagine you can increase ALL wages, of everyone, that's utopian and delusional and has never happened, and could never happen. But if somehow you could make it happen, it would be only by increasing all the prices so much, and decreasing production so much that you'd still cause an overall increase in poverty and starvation, despite many receiving nominally higher wages. Others would be laid off, because business couldn't afford such an increase in labor cost, and the overall result -- from inflation and shut-down of production -- would be an increase in total poverty.

The only way to reduce the poverty and starvation is to produce more stuff, or produce it better. There has to be an IMPROVEMENT IN PERFORMANCE of workers in order to make society better, not just increasing someone's wages above what their market value is.

So the phrase "that the lowest prices means they live in poverty or starvation" is meaningless and incoherent.

How is a starving person made better off having to pay even higher prices? If they're starving at the low prices, they will starve even more if the prices are made higher. The lower price can only reduce their starvation, not increase it. Increasing the price to them does not make them better able to buy food, but less able.

If the consumers are also workers whose wages are so low so that the lowest prices means they live in poverty or starvation, then it is not obvious that Lumpen's view is true.

That "the lowest prices means they live in poverty or starvation" can never be true or make any sense. It can mean only less poverty or starvation, never more. The consumers being served by this or that production are always a vastly greater number than the workers doing the production. Remember that in some cases, the workers are VOLUNTEERS! paid ZERO!, and even then the total poverty and starvation is reduced because of the production, or the work done. The wages can't be lower than ZERO, can they? And yet even at that "lower" wage level the total poverty and starvation is REDUCED (by the increased production), not increased.

And there are many real examples of workers paid ZERO, volunteers, doing work which promotes survival of consumers, just as legitimate as paid workers, and these unpaid workers
are not slaves! because they're free to quit.

So it's only getting the work done which can produce benefit, not paying higher wages to the worker (unless this is necessary in order to get the work done).

If one expands the view to overall well-being instead of well-being from the consumption of goods and services, it is even less true. For example, free trade with a country or company that uses forced labor may result in . . .

But there is no such country or company today. "forced labor" is not about the real world, and so is hypothetical only. It's OK to theorize possibilities which don't really exist, but this doesn't address any practical issue today, such as "fair trade" vs. "free trade" or anything in today's global economy.

But we can suppose a slavery scenario as a hypothetical possibility today. Other than some criminal examples, such as in the underground economy, we can take the worst-case scenario, perhaps N. Korea, which might be accused of practicing slavery. This has nothing to do with free trade or "fair trade," but rather is about nations deciding whether to take action against an outlaw nation, which can happen at least in theory.

When Apartheid was practiced in South Africa, the world community united to condemn it and take common action to boycott that nation. Nothing prevents a similar action being taken today against any other form of criminal behavior by an outlaw nation, whatever the crime is.

So if the world community decides to condemn N. Korea or China or any other nation, and to impose sanctions or embargoes or boycotts against that nation for slavery or other crimes, then it's appropriate for every nation to cooperate in the action to punish that criminal behavior. This has nothing to do with the question of free trade vs. fair trade. The "fair trade" crusade is not about punishing criminal behavior, but is about condemning global competition which drives down wage levels. It condemns the low wages resulting from wage competition, just as all competition between producers leads to lower production cost and thus lower price to consumers. This has nothing to do with slavery or other crimes. Low wages can never be equated to slavery, as long as the workers make a free choice not coerced by the employers, because even if the wage is ZERO, it's still not slavery.

. . . free trade with a country or company that uses forced labor may result in the lowest prices for consumers, but consumers may feel worse off knowing that those goods are produced by slave labor.

If there were any such slave labor today, there might be some practical point here, but this is totally hypothetical.

If the production continues on taking place anyway, in the hypothetical scenario, so there's no legal action or policing to stop it, then it's dubious whether the consumers who buy the product are made worse off, or whether they make anyone worse off by buying the product, even if they know of the slavery. Those who choose to boycott the product are not necessarily doing a favor for the slaves producing it. It could be that everyone is better off anyway, continuing to buy the product made by the slaves, given that the slavery will continue no matter what. At most, all that is accomplished by boycotting the product is that the production decreases, or comes to an end, at which point the mistreatment of the slaves is just as likely to get even worse.

In addition, Lumpen's claim that more competition = everyone is better off is false. More competition may make some consumers and business better off. It is theoretically possible that more competition makes everyone better off. However, in the case of economies of scale or scope, more competition may make many people (possibly everyone) [worse off] by preventing producers from reaching the maximum economies of scale or scope (i.e. the lowest price).

There's no example of producers prevented from reaching the maximum economies of scale, other than RESTRICTING trade and restricting competition. It's allowing full competition which more likely leads to the maximum economies of scale, rather than restricting competition.

The idea that a company could be made to achieve the maximum efficiency of production and minimum cost by means of giving it some kind of uncompetitive advantage, or monopoly -- restricting competition -- is fantasy, unless this refers to something like public utilities, or natural monopolies, where it is recognized that there has to be a franchise to one company, or the production has to be state-owned. Other than that, there can be no advantage or improved performance by means of restricting competition, including greater economies of scale.



"All in all" Free Trade vs. Fair Trade -- summation

All in all, Lumpen's argument has is shallow in logic, economics and human deceny, and deep in anti-worker bias.

That says it all! "Everything in the world you could ever want to know" about free trade vs fair trade is right there in that clear succinct precise "has is shallow in logic, economics and human deceny" synopsis. Straight to the point!

Ziprhead says that the more succinct statement is the truth, while "Walls of Text" have to be wrong. So "fair trade" wins, because the "FREE TRADE" argument is too long:

FREE TRADE case: more competition = prices/wages are set by supply-and-demand only = lower prices to all = lower cost of living = higher living standard or greatest good for the greatest number (even if some uncompetitive producers -- a minority -- are made worse off in the short term).

While the "FAIR TRADE" case is summed up in fewer words, and is therefore the truth:

FAIR TRADE case: Lumpen is shallow and indecent and biased.

Those are the arguments in a nutshell. And according to Head Umpire Zipr, the latter wins because it's fewer words.

 

[ZiprHead]

Ziprhead says that the more succinct statement is the truth, while "Walls of Text" have to be wrong. So "fair trade" wins, because the "FREE TRADE" argument is too long:

I said no such thing.

But I will say this. Hiding your incorrect conclusions in walls of text doesn't make them correct.

 

[ZiprHead]

lower cost of production = lower price (for the same production) -> consumers / everyone made better off

I guess "everyone" in your utopia doesn't include the workers whom in your view don't deserve a suitable wage.

I destroyed your main conjecture in 19 words. Do you see how that works?

 

[Loren Pechtel]

Relying on the flawed model of assuming the pie is being divided into two. In the real world there are three portions!

I never said anything about only two portions. You're deflecting from the fact that the wealthy are taking a larger portion of the pie and it's coming from the worker's portion.

You continue to assert that based on a two-portion measurement.

 

[Loren Pechtel]

It's not extortion. It's a balance of power. As it stands, it is the employer who has the power to set wages and the employee who has no choice but to either accept or have no income. That is extortion.

The two aren't incompatible.

"Give us money or we wreck your business" is extortion. Whether it's done by outsiders or employees doesn't change that.

Who, besides you, is saying "give us money or we wreck your business?"

That's what a strike is!

 

[ZiprHead]

Who, besides you, is saying "give us money or we wreck your business?"

That's what a strike is!

Name three companies that were put out of business by a labor strike?

 

[DBT]

Who, besides you, is saying "give us money or we wreck your business?"

That's what a strike is!

No, it's not. Going on strike is a last resort when negotiations break down. The aim is to improve pay and conditions, not 'wreck the business,' which would be a stupid thing to do.

 

[Lumpenproletariat]

The clamor for higher wages is only a religious impulse, based on superstition, not reason or evidence.

Thou shalt pay higher wages, for the mouth of Karl Marx hath spoken it!

Bernie Sanders and Donald Trump are the "jobs! jobs! jobs! jobs! jobs!" missionaries.

"Fair trade" and Labor union crusaders are the "Sons of Light"

Employers are the "Sons of Darkness" and Satan, or devils which must be cast out.

Why Aren't Wages Keeping Up? It's Not The Economy, It's Management

''In this article, I’d like to explain why this may not a problem of economics, but rather an issue of management – and one which we can address by changing the nature of the discussion.

Point 1: Wages Are Not Keeping up.

Let’s just discuss the issues of wages: they are not keeping up with inflation. Consider the data below. While the GDP has risen (after inflation), real incomes have barely budged.
Wages not keeping up with inflation.

Wages not keeping up with inflation. NY Times

In fact, if we look at U.S. wages over the longer term, wages after inflation have barely budged over the last 44 years.

It’s frightening to consider, but my parents, who were a young couple in the 1960s, could buy a house for less than 25% of their take-home pay. They owned two cars and put my brother and me through college on a middle-income salary. (My father was a scientist with a mid-level job.) That dream is elusive today.

As Heather Boushey, an economist with The Washington Center for Equitable Growth puts it,

The economy is growing. Why aren’t people feeling it?” Boushey says. “The answer is: Because they literally aren’t feeling it.

And it seems to be getting worse. Despite an increase in wages most recently (2.9% as of August of 2018), income inequality has increased, leading even more to feel they aren't keeping up. While the stock market has benefited those with savings and 401(k)s, most don’t feel it.''

Point 2: Workers Are Struggling

The second piece of evidence I want to point out is the level of financial stress we see among workers. Look at some of these statistics:

40% of Americans had trouble paying for food, medical care, housing, or utilities in the last year.
Nearly half of Americans have no retirement savings, creating increases in stress-related illnesses and heart disease
63% of Americans do not have $500 of cash on hand to handle emergencies or other significant expenses
70% of college grads have $15,000 or more of loans outstanding in their first year of work
4 in 10 Americans now have a “sides hustle” to make more money to help make ends meet[9]
Employers like Wal-Mart, McDonald’s, Ubers, and Outback Steakhouse are now building programs to pay people every day, so they can better manage their cash.



Point 5: This Is A Management Issue, Not an Economic Issue

The bottom line is this: lagging wages in the U.S. is not an economic issue, it’s really about management. The spirit is there, but the actions are not.

translation: The employers ("management") are bad people who should feel sorry for the workers and pay them higher, out of pity for them. Crybaby Economics 1A

fundamental premise/religious commandment: wage-earners must be paid higher, the 11th Commandment -- Thou shalt pay wage-earners higher wages.


None of the above crybaby-pandering answers our basic question: Why should any wage-earners be paid more than their value determined by supply-and-demand, or determined by the market, where competition causes prices (including wages) to go up or down, or remain stagnant?

Since the market determines the prices of everything bought and sold, based on supply-and-demand, why shouldn't it determine the wage levels of different workers, based on their value, or the need for them, on their replaceability, on their scarcity? "Fair trade" usually requires that the wages somewhere be increased, in one way or another, and that "free trade" driven only by market supply-and-demand tends to underpay some wage-earners.

But the judgment that some workers are underpaid is not ever explained. It's just a crybaby demand without anyone ever explaining what justifies any workers being paid above what the market says is their value.

Why should we just start with this religious premise that wages are too low? It makes no sense really, because the truth is that many workers are paid high wages, because they are more valuable. Just because there might be a general trend toward low or stagnant wages does not change the fact that workers who are more competitive are paid very high, because their higher value is rewarded.

So before whining that wages are too low, you first have to identify WHICH ones, or which workers are underpaid, and then explain how you know they're underpaid. How do you know it's not just that their value is lower, or is stagnating? If their value has stagnated, or even decreased, then shouldn't their wage level also stagnate, or decrease?


Is something wrong in the economy, causing some wage stagnation?

Maybe something has gone wrong with the U.S. economy, or the global economy, such that the living standard has not increased for everyone as it should, and that only a tiny minority elitist class has benefited recently.

It's a legitimate theory that there is something wrong somewhere. But it doesn't seem to have anything to do with wage-earners per se as being the victims. Rather, you could say there's an inequality gap which is too large, and it's not only wage-earners, but also independent contractors who are suffering some bad result from it.

Also, there are a few "workers" who are well-paid who are in the elitist class which benefits.

If so, then let's stop the obsession on wage-earners, and the scapegoating of employers (many of whom are middle-class and poor), and instead figure out if something is wrong with the economy. The above Forbes article by Josh Bersin doesn't sound like anything other than just a crybaby-pandering appeal to feel sorry for wage-earners, because they're a majority of the producers, and it's always popular to say whatever the idiot masses want to hear, regardless whether it makes any sense. He doesn't name any problem in the economy, but just seems to want to scapegoat employers, because this wins applause from the mass of wage-earner crybabies out there.

You want an explanation for what's wrong with the economy? Alright, here's a theory which makes sense, and fits the facts:

The problem is caused by the
extreme debt addiction, beginning in the 1930s in the U.S., and in most other countries also in the 20th century.

This extreme debt did not exist prior to the 1930s, and the extent of it has gradually increased, with some ups and downs along the way, ever since it began almost 100 years ago. These high debts, way out of line from anything ever thought reasonable prior to 1930, can be causing constant ANTIstimulus shocks to the economy, regularly happening, because that debt has to be paid back, and is paid back, with perhaps a small percent of increase in the unpaid balance, but still there is no default (or virtually none), so that it's all paid back regularly, on schedule, and every repayment of debt (principle and interest) is just another ANTIstimulus to the economy every time it happens, which is just about all the time.

Why shouldn't this be doing constant damage to the economy? Not only to the U.S., but to most other countries also? especially the ones which have the higher chronic debt level?

Doesn't the STIMULUS benefit the economy short-term, causing new jobs and businesses to expand? That stimulus happens when the debt money is increased, so that taxes are lower and there's more spending to GOOSE the economy. Now, that being the case, doesn't it make sense that the OPPOSITE, a payback of the debt, paying off the bond-holders regularly, has the OPPOSITE effect on the economy, causing an ANTIstimulus equal to the stimulus caused earlier when the money was borrowed?

And with these constant ANTIstimulus shocks, just as strong as the earlier stimulus benefits, it's likely that the jobs and businesses will be negatively impacted, so that constantly, regularly, every year, along with the new federal deficit for that year, there is also the ANTIstimulus, usually just as strong as the stimulus that year from the current deficit.

So maybe that's what's wrong with the economy. It's not that there's something wrong with wages per se, but there's something more general going wrong, hitting everyone except the top 1%, and dragging down everyone's living standard, or making everyone's income stagnate.

It makes no sense to say there is something wrong with the wage level that's causing whatever is wrong. No theory about that makes any sense, and there's no empirical evidence connecting low wages causally to whatever it is that's wrong.

But we know that an ANTIstimulus has to hurt the economy and do damage to most people. And these ANTIstimuluses are happening regularly, and have gotten steadily worse since they began 80 or 90 years ago. Which is the period during which we have seen this increasing stagnation of the economy, where it seems only the top 1 - 10 % benefit significantly, while most of the population has to struggle to survive.

This makes much more sense to explain what's wrong than the popular impulse to scapegoat employers.