Productivity Economics: Making Capitalism Work Again

Middle class living standards are declining while the economy stagnates. The gap between wage earners and those earning income from capital is widening significantly. Federal Reserve stimulus efforts have not revived growth, and the current economic stagnation reflects failed government policy rather than normal conditions. Capitalism is no longer functioning effectively in America, as evidenced by extreme politics in the 2016 presidential campaign. The U.S. imports increasing quantities of goods and services, displacing American workers. Corporate revenue and profit growth have slowed, leading many large companies to reduce their workforce. Some states are raising minimum wages, though the impact on low-income workers remains uncertain—it may improve living standards or accelerate job losses and unemployment. Automation, artificial intelligence, and robotics will displace workers across skill levels. This book examines connections between trade, wages, automation, and living standards. It presents economic policy proposals intended to restore healthy growth and improve living standards for all workers. The central argument is that real economic growth depends on productivity growth, yet productivity growth is inherently deflationary and reduces labor demand. How productivity gains are distributed throughout the economy determines whether a nation achieves broad prosperity or experiences stagnation with rising inequality. The book emphasizes that meaningful increases in living standards for low and middle-income people represent the most important economic metric for a functioning society.