By Gail Tverberg: Why We Have a Wage Inequality Problem

Here is the latest excellent work by Gail Tverberg.

In this essay Gail explains what is causing the discontent that has enabled the rise of Trump, and probably other worse leaders to follow that exploit human hardship.

Gail explores a wide solution space and concludes that there is nothing we can do to avoid collapse other than perhaps kick the can a little longer.

This led me to ponder the following…

If humans were able to break through their evolved denial of reality and understand their predicament, then we might avoid wars and violence associated with blaming others for our misfortune.

However, if the majority understood our predicament the system would likely collapse immediately because it is elevated today in large part by faith and belief.

Given that collapse is imminent regardless of what we believe, I’m thinking I’d prefer a world where people understood what is going on and worked together to make the best of a bad situation rather than seeking scapegoats.

But since life at its core is replicating chemical reactions competing for finite resources, we should expect the worst and be very grateful for anything better.

It would be really nice to “roll back” the world economy to a date back before population rose to its current high level, resources became as depleted as they are, and pollution became as big a problem as it is. Unfortunately, we can’t really do this.

We are now faced with the question of whether we can do anything to mitigate what may be a near-term crisis. At this point, it may be too late to make any changes at all, before the downward slide into collapse begins. The current low prices of fossil fuels make the current situation particularly worrisome, because the low prices could lead to lower fossil fuel production, and hence reduce world GDP because of the connection between energy consumption and GDP growth. Low oil prices could also push the world economy downward, due to increasing defaults on energy sector loans and adverse impacts on economies of oil exporters.

In my view, a major reason why fossil fuel prices are now low is because of the low wages of “ordinary workers.” If these wages were higher, workers around the globe could be buying more houses and cars, and indirectly raising demand for fossil fuels. Thus, low fossil fuel prices may be a sign that collapse is near.

One policy that might be helpful at this late date is increased focus on contraception. In fact, an argument could be made for more permissive abortion policies. Our problem is too little resources per capita–keeping the population count in the denominator as low as possible would be helpful.

On a temporary basis, it is also possible that new programs that lead to rising debt–whether or not these programs buy anything worthwhile–may be helpful in keeping the world economy from collapsing. This occurs because the economy is funded by a combination of wages and by growing debt. A shortfall in wages can be hidden by more debt, at least for a short time. Of course, this is not a long-term solution. It simply leads to a larger amount of debt that cannot be repaid when collapse does occur.

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