NEWS FLASH — Productivity Up, Wages Down!

The lead story in today's New York Times reports that real wages have continued to go down while productivity continues to climb. Obviously the Times has an elite audience that has been removed from the world of work for a long time. The boom in productivity has been a direct result of stagnant wages for years. Most of so called "real wages" have seen increases only through the higher premiums paid for benefits by employers, when employers actually provide benefits.


Inflation Expected to Rise in Near Future:

Economists are expecting inflationary action in the near future as a result of global trends. The annual $700 billion dollar trade defficit is seen at the heart of the problem, which experts believe will be at least in part out of the hands of Americans in terms of being able to curb. For more, see today's New York Times.


Academics Proclaim "Big Stars Do Not a Big Box Office Make":

For years now Hollywood has banked on big name stars to insure the fiscal success of their films. However, recently academics have been study the situation and recently announced that there is no statistical correlation between the two.

Why is this important, aside from the fact that Hollywood is one of our most economically viable industries? Maybe because it is part of the whole notion about the necessity to have big stars on your team, whether in making a movie, fielding a sports team, or creating a corporate structure:

Note the following from today's New York Times:

Superstar economics, which has been used to explain the astonishing fees of top lawyers and the skyrocketing pay of star chief executives, dates back to the insight in the late 19th century of the British economist Alfred Marshall, who observed that “the relative fall in the incomes to be earned by moderate ability … is accentuated by the rise in those that are obtained by many men of extraordinary ability.”

The dynamic was explained by a University of Chicago economist, Sherwin Rosen, in a 1981 paper entitled “Superstar Economics.” Mr. Rosen posited that improvements in technology that would make it easier for top performers in a field to serve a larger market would not only increase the revenue generated by stars, but would also reduce the revenue available to everybody else.

However, the actual numbers don't seem to crunch that way. You've always got to suspect that the illusion might just be for the benefit of the person who creates it, kind of like the image the used car salesman creates for you when you step on his lot. Imagine the ramifications for CEOs. Maybe GE doesn't need to pay their CEO ten gazillion times more than their average workers.