The
growing disparity between workers’ wages and corporate profits is a perfect
example of the Rule of Alternation in action.
Briefly stated, the Rule of Alternation states that for every action
there’s an equal and opposite reaction, i.e. the pendulum swings both ways.
From
the World War II era until the 1980s, workers were in the ascendant and
benefited from rising wages during these decades. Labor unions enjoyed unparalleled political
power and were a contributor to those rising wages. Unfortunately, the unions pushed too hard and
were responsible in large measure for the de-industrialization trend that took
shape in the ‘70s and ‘80s as corporations sought to escape onerous levels of
taxation and wage hikes by moving to lower-cost countries such as Mexico and
China.
Since
the 1980s, corporate profits have experienced a parabolic growth trend while
wages have continued to decline. What this
shows is that when an entity, in this case workers/unions, push too hard,
sooner or later the opposition pushes back with equal or greater force.
There’s
also something of the Kress cycles involved in this long-term pendulum
shift. The new 60-year inflationary
cycle which began in 1954 onward favored the rise of the working class since it
fostered rising wages and was supportive of America’s (at the time) vibrant
industrial economy. The peak of the
60-year cycle and the corresponding peak of inflation in the early 1980s saw
the shift back in favor of corporations as wages began declining adjusted for
inflation and interest rates started receding.
