That is: but what happened to the West? The question refers to the difference between promises and results. About fifty years ago the promise of western systems was that anyone who studied a lot and then worked a lot could have access to the so-called "middle class" status.
If we now compare the results with the expectation, we discover that things have gone differently: after 50 that the younger generations slip into the assembly line of the middle class, sacrificing their existence (or at least most of the time available) to this process, the result is that the middle class no longer exists and the economy is taking a feudal form.
This is what the cialtroni of finance (MMT, and others) come to tell us that "it would be enough to print money" and that "every small nation must have its own small currency and be free to devalue or revalue according to the market".
And it is precisely this, according to the detractors of the Euro, that is hurting us.
It's a pity that things aren't quite like that. Here's one thing we can think about:
As you can see, since 1948 (when the Bretton Woods agreements were made after the war), productivity and wages have grown together. It was the "swing" years of the economy and growth, when the first really robust middle class of the last century (which then made '68) was created, in short.
But you can see that eventually the problem starts in 1973. Long before the euro. It is clearly enormously visible today, because the gap between productivity and income has become HUGE, but it has started to open since 1973.
What happened? It happened that the companies produced more but continued to pay the same salary. As a result, earnings were concentrated in a few hands.
This trend has continued since 1973: as you can see, wages have grown very little since then in relation to inflation and the cost of living, while productivity has literally exploded.
What does it mean in detail? It means that to go back to the swing times, ALL salaries should be multiplied more than twice .
To realign ourselves to growth and rebuild the so-called "social lift" we should adapt wages not to inflation, but to the rate of productivity. In this sense, the mission of the ECB is wrong because it uses rigid parameters: its objective should be to keep the inflation rate not equal to a conventional number at random, but equal to the increase in the productivity rate.
But the ECB is a secondary problem, since in 1973 the euro did not yet exist and the EU was called EEC, and had only a small fraction of today's weight.
But what happened then in 1973? What does this date represent? Which asteroid has fallen on the planet such that all entrepreneurs together have stopped increasing wages?
In December 1971, the Group of Ten met at the Smithsonian in an attempt
to build a new international monetary system. The Smithsonian Agreement> led to the devaluation of the dollar from $ 35 to $ 38 per ounce of gold.
However, because US expenditures and current account deficits were
continuing, this devaluation did not stop the speculation against the dollar.
In 1972, the devaluation of the dollar reached $ 44 per ounce of gold. Clearly,> whatever remained of the Bretton Woods system couldn't be rescued. In
February 1973, the US and other industrialized countries let their
In practice, it happened that the countries that had been destroyed by the Second World War had rebuilt, the US was no longer exporting to us as soon as possible, and to make matters worse these rebuilt countries had started selling in the US. American companies, which had grown without competition (and therefore without innovation) after the war had suddenly found themselves under pressure. The government had made a lot of debt, and the dollar had collapsed.
As a result, the US exited Bretton Woods, and from that moment the value of the currency was anchored to the costs of production. The equilibrium returned stable, but the production costs (including labor) did not go up any more: consequently, as technology progressed, incomes stabilized as productivity increased.
This alone should close your mouth to anyone who says that having a lot of freely floating coins is good. As soon as it happens, (as can be seen from experience) the equilibrium value aligns with the cost of labor, and incomes do not grow while productivity increases.
How do you get out of it?
- Another international fixed exchange monetary system is created. Impossible, Trump does not hear us, the Chinese want to devalue, etc. With scores of coins in play it would be impossible.
- Producers are obliged to multiply wages by ~ 2.5. It would be impossible to do it on a global scale. Bocciata.
- In countries that want to solve the problem, industries are taxed and the delta is redistributed. Interesting, but implies a constant tax burden of around 60%.
They are all three in fact, but the last of the three is the least in fact. It does not mean that it is feasible, but there are already countries that have taxes towards 60% (typically Scandinavian states) and have a full-bodied middle class.
Raising taxes is also something that states like to do, and therefore the problem will be only to break a taboo.
But the solutions start, the problem is that those who propose the monetary solution, or other trifles based on printing money, have not understood the point.
- From what we observe, the currency has fluctuated since 1973, leaving the purchasing power of income unchanged. If you print more, no inflation arrives: only a worsening of workers' conditions arrives.
- From what we observe, the possibility of fluctuating and devaluing is not the solution, for the simple reason that it is the cause.
So no, this superstition that the economic problem can be solved by acting on the currency is stupid and foolish, because from what we observe , since they have been left free to oscillate, the oscillation has had the effect of leaving constant (or almost ) the purchasing power of personal income.
So the solution changes everything, but not the problem we wanted to solve.
So I don't want to hear about monetary solutions to current economic problems. The only known solution that can be implemented is a tremendous increase in taxation on the wealthy.
Whether you like it or not, sooner or later the balance sheet arrives. The incomes accumulated with the growing gap between productivity and work must go back into circulation, otherwise a very simple thing will happen.
People will stop working, or stop looking for work.
Which is what's going on. Remember the NEETs?