Fixing the Economy: The "Company Store" Problem

Economic growth and productivity growth have stagnated since 1979. The distribution of income and wealth has become increasingly unequal: 10% of the population now receive 40% of current income and own 85% of financial assets and 70% of all wealth. Both households and government have accumulated over $4 trillion in additional debt since 1979. An "investment gap" is the fundamental problem. In the last decade, corporations and high-income households loaned 1/4 of their investment income to government and other households to finance current consumption. As productive investment declined as a percentage of national income, speculative financial investment and total debt grew. A "company store" economy developed. Low wages and low taxes increased the share of income going to the wealthy. In turn, they "invested" in the increasing debt of the government and households, and the households and government borrowed because wages and taxes were inadequate to support their spending.