By Sandro Scocco is Chief Economist at the Stockholm-based think tank Arena Idé and has a background as the Chief Economist of the governmental research institute ITPS. He is also a former Director at the Labour Market Board and served during the 1990s as an adviser to several Swedish social democratic ministers.
From the Social Europe Journal, December 9, 2016
A popular narrative today is that low-income groups in the western world have fallen behind owing to jobs lost to new machines and to low-paid jobs overseas. Political populists like Trump or Le Pen have happily exploited this frustration with nostalgic, nationalistic and anti-free trade messages. A new study shows that this narrative has little support in historical trends.
Certainly, large groups have fallen behind in recent decades. But this is true not only of low-income groups but also of large parts of the middle class in many countries. Take, for example, those with higher education in the US; their real incomes have stagnated in the past 15 years. In the whole of the industrialised world median wage growth has fallen markedly behind GDP growth. By contrast, the top 1 percent have increased their income much faster than the rise in GDP and, in some countries, including the US and Sweden, they have more than doubled their income share.
So, there is a clear breeding ground for anger and frustration among broad groups, and not just among low-income earners, but is it really related to technology and trade?
Dr. H. Nejat Seyhun, contributing writer to The BusinessThinker magazine, is the Jerome B. & Eilene M. York Professor of Business Administration and professor of finance, Ross School of Business, University of Michigan. He is an internationally recognized authority on financial issues and Derivatives.
As we welcome 2012, it is a good idea to take stock of the lessons of the roller-coaster stock market of 2011. The year ended on a mixed note. The Dow Jones Industrial Index was up about 6%, S&P 500 index pretty much flat and Russell 2000 down about 4% for the year. Overseas, European and Asian stocks fared worse. MSCI Europe ETF and iShares S&P Asia 50 Index ETF were both down about 15%.
Investors’ concerns in 2011 were about existential issues. They worried about a possible collapse of euro, wide-spread European sovereign and bank defaults, and possible global depression. Investors also worried about disorderly Greek, Irish, Portuguese, Italian and Spanish defaults. A new term was coined, Private Sector Involvement (PSI), to euphemistically refer to private investor’s losses on their European sovereign debt holdings, a concept that would have been unthinkable a year earlier. Consequently, the prices of European periphery sovereign debt plummeted and their yields skyrocketed.
Against this dooms day scenario, a surprising bright spot was the U.S. economy. The U.S. economic picture steadily improved during the year. The U.S. GDP growth rate rose from 0.4% in the first quarter to 1.8% in the third. Retail sales increased about 8% year-on-year and unemployment declined from 9% to 8.6%. Forecasts of S&P 500 stock earnings in 2012 surpassed $100.