3.1 Growth of productivity and wages growth
Neoliberal theories of the last 30 years are saying that growth of wages should be lower than growth in productivity of work. What impact is this strategy having on debt growth?
Huge. If growth in wages is lagging behind productivity growth just by 10%, with given inputs after 40 years the debt will climb to 109% compared to 67%, so it is 63% bigger!!! With only halve growth of wages against productivity the resulting debt would be startling 284%, so 324% bigger!!!
It is understandable, as lower the wages the more buying power will there be missing for realization of planned sales, which’s pace of increases is higher than pace in wage increases.
Economy policies, aimed at faster growth of productivity then wages are direct cause of faster pace of growth of state debt, as missing buying power will have to be supplemented exactly by this higher debt, otherwise these planned profits will not be achieved.