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2016 | OriginalPaper | Buchkapitel

10. The Shortfall in Demand

verfasst von : Heleen Mees

Erschienen in: The Chinese Birdcage

Verlag: Palgrave Macmillan US

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Abstract

In a globalized world, the effects of unlimited supplies of labor in China spill over to advanced economies as well. Between 1980 and 2013, labor’s share of GDP dropped 9 percentage points while profits after tax as a share of GDP increased by roughly the same amount. Globalization instead of technology has been the main driver of the fall in labor’s share. As investments in advanced economies do not keep up with rising profits, there is, in effect, a shortfall in demand. This shortfall is structural instead of cyclical as Keynesians tend to argue. The best way to redeem the shortfall in demand is by redistributing income from capital to labor in a way that reinforces labor, such as by investing in education and health care.

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Titel: The Shortfall in Demand
verfasst von: Heleen Mees
Verlag: Palgrave Macmillan US
Buch: The Chinese Birdcage
Print ISBN: 978-1-137-58888-3

Electronic ISBN: 978-1-137-58886-9

Copyright-Jahr: 2016
DOI: https://doi.org/10.1057/978-1-137-58886-9_10

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