The Myth of Capitalism

Chapter FourSqueezing the Worker

No society can be flourishing and happy, of which the far greater part of the members are poor and miserable.

—Adam Smith, The Wealth of Nations

This book started out as a simple detective story: Who killed your paycheck?

When we're not writing books, we spend our hours looking at economic charts of leading economic indicators. Sometimes, we even think about them when we shave or are in the bath, where we hope for a eureka moment. Our clients pay us to tell them where the economy is heading and how they should invest. They want to know answers to important questions like: Will the United States go into a recession? Will China experience a big debt crisis? Will Italy leave the euro? Will US wages rise?

Our clients are not economists. They are entrusted with the savings of pensioners and the insurance premiums families have paid. They're investors managing people's savings, and it matters to them whether inflation is rising, whether unemployment is falling, and whether profits are rising. These factors affect the investments of pension funds, insurance companies, and mutual funds. They want to avoid major market crashes, and benefit when markets are good.

Most of the charts we use to advise our clients go back decades and are based on sound fundamental relationships, so they never need changing. If building permits are strong, the housing sector will flourish, and the economy will be strong. If the People's Bank of China is hiking interest rates, ...