March 19, 2009

Our Real Economic Problem

We hear endless analysis by intelligent writers and reporters of all stripes on our economic situation, but rarely hear of one of our most central economic problems.

Much damage in our economy results from incentives -- many of the most productive workers in our society are earning barely enough, and some struggle, while much greater rewards (and thus incentives) go to activities of little net benefit .

Average wages (including benefits):

Teachers -- $43,000
Engineers -- $66,000
Carpenters -- $30,000
Auto Mechanics -- $32,000

While the average derivatives trader in New York state makes about 3 times the average New York state wage:

Derivatives Trader in NY state (NYC is only $8000 more) -- $126,000
Average NY state wage -- $46,000

But traders make their living off of the rest of us.


The value of money is created by what it can buy -- goods and services that working people produce. Money has value because people create goods or services you actually need to live and want to have for enjoyment.

But traders do not produce goods or services we need or want. Instead, they find ways to make stocks or gasoline supplies or other things we need or want to buy more expensive when we purchase them, pocketing the extra cost they have created.

We set up our economy to reward gambling and trading that adds costs to average American lives, and at a salary rate of two and three times that of ordinary American jobs.

This set of incentives created our our Real Economic Problem, as trading expanded until it destroyed the structure of the whole economy.

We are now suffering the outcome and consequences.

No comments:

Post a Comment