 If the particular employer doesn't want to pay him, he leaves and negotiates a better deal with another employer. And this is true at every level of employment. This is true if you're just in a factory making widgets. It's true if you're a gardener. It's true if you're a software programmer. It's true ultimately if you're a super CEO. So at every level, your wage is going to be determined by your productivity. And the higher your productivity is, the higher your wages. However, the left has over the last few years developed a story that basically says since the 1970s, productivity has continued to go up, but wages are stagnated. So wages have now gone up with productivity and they show a graph. So let me show you the graph. Let's get a graph. I'll show you how to lie with graphs. There's your graph, right? So here is the line, right? You can see the line of productivity. Productivity increases. And then the light blue is the line of hourly compensation. And you can see that since 1973, there's been this divergence between productivity and hourly compensation. And the story, of course, is that who gets that difference? Because there's more productivity, which means more stuff gets produced. So who is making the profit off of that? The workers are not getting compensated for the fact that they're more productive. So who gets it? Well, corporate profits, right? Companies, profitability, that who gets it. Now, this is a graph you see everywhere. People talk about it all the time. So even in my debates, capitalism versus socialism, my opponent said, well, everybody knows, everybody knows that over the last 40 years, there's been this divergence of productivity from hourly compensation. This is proof of exploitation. This is proof markets don't work. This is proof capitalism has failed. It's proof that we need unions because nobody represents the worker and they can't negotiate. And we know that employers are just exploiters and they'll suck every last dime out of it. So I've heard this over and over again, and it just can't be right. Let me put it this way. This graph can't be right because it violates a principle of economics. So either there's some government program suppressing compensation or the graph is a lie. But in a market, even in a controlled market like we have today, there has to be because there's still competition out there. There's competition for labor. There has to be a direct relationship between productivity and compensation. So I went digging and again, everybody cites this graph. Everybody. And the right does it too. One of the things that the right cites is that this is a graph that explains why workers are so frustrated and why they would vote for Donald Trump and why they want tariffs and why they want more government involvement because they're being screwed. They become more and more productive over the years. They've increased their productivity dramatically. If you look at productivity in 1973 and productivity today, I mean, it's big increases. And yet their wages are flat. They've gone nowhere. Nothing has happened. And this would create frustration. And let me just say, I think people are frustrated because they've been told the story. So I went and did a little bit of digging. Does this make sense? And it doesn't take very long. And it doesn't take much research to figure out how bogus this graph is. And again, I repeat, everybody uses this graph, right? Everybody uses this graph. So let's break it down why this graph is bogus. And I don't expect you to know the terminology, you understand all the terminology. But I think there's enough here that's just pretty common sense, simple, for you to understand that they are lying to you. And it's not innocent. Now, I think the guy who I was debating on socialism, he doesn't know. And he hasn't done the research. He's never looked it up. It fits his narrative. It fits the story he believes in. Oh, business students screw their employees all the time. And he doesn't know economics. And he's not going to go research this. See, you know, so in that sense, he's not lying. But he's not being honest. Because honesty involves more than just telling people what you think. Honesty involves knowing what you think. Honesty involves is what I think is what I'm going about to say in public. Is it true? Have I researched it? Has I figured it out? Have I done my homework? Do I know this is true? And it's not hard to figure out. It's not hard if you do the research to see that this is just untrue. This is just dishonest and a lie. And all the people who use it are being dishonest and a liars. And this, by the way, I'm giving you one little example. This is everywhere in economics. Everywhere. Everything you hear from Donald Trump to Paul Krugman to Boone Sanders and everybody in between is lying about economics. They're lying about economics because they don't know economics and they don't know economics but don't bother to study it. And yes, they talk like they're experts in it. Or they truly know and they lie about it. This is true of Trump's economic advisors. This is true of the pundits on Fox and the pundits on MSNBC and CNBC. Very, very, very few of them know anything about what they're talking about. I include here the Wall Street Journal, particularly on the front page. All right, so what's the problem with this graph? So we've got a graph, productivity's going up, hourly competition, the flag's out from 73 and moves nowhere. Well, the first problem with the graph is that the competition, the hourly competition is not for all employees in the economy. Let me say that again. The hourly competition is not for all employees in the economy. And it says here, if you look in the fine print, it says hourly competition is for production slash non-supervisory workers in the private sector. But the productivity graph is for all workers in the economy. You understand what's going on here? Productivity is for all workers. This other graph, wages, is just for production and non-supervisory workers. Now, let's say, hypothetical, hypothetical that happens to be true, that most of the productivity gains over the last 40 years have happened in non-production, non-non-supervisory roles. That is that most of the productivity gains have been in places that this graph is not capturing, in places that the wage graph is not capturing. For example, let's say in better management, in better use of capital, in a variety of different other professions that are just, I don't know, lawyers, consultants, financiers, Apple, particularly upper management at Apple, particularly design, particularly innovation. What if all the productivity gains are there? And there's very little productivity gains in the other. So the gap between highly-competited people and everybody else has increased over the last 40 years. And the reason that gap has increased is because the level of productivity of the people who are typically highly-competited has increased faster than the level of productivity of, if you will, manual labor. So you're not measuring productivity versus wages. You're measuring the difference in productivity between those production and non-supervisory people and the people you're not capturing here. So you're measuring what people out there call inequality, wage inequality. Yeah, wage inequality has increased. Think about what's happened in technology alone. So one, is you're not measuring what the people who claim this is measuring is measuring, right? If you want to measure the relationship between productivity and competition, then you have to have competition of everybody in the economy. And then what you find is that these graphs narrow significantly. So the gap between competition and productivity narrows significantly. All right, now, but there's still a gap. Well, then it turns out, all of these are done in kind of constant dollars. So they all require adjusting the dollar amount of productivity and the dollar amount of wages chew by inflation, by some measure of inflation. So it turns out that they use two different measures of inflation to adjust productivity and to adjust competition. And it makes absolutely no sense as Scott Sumner, an economist, a monetary economist, I recommend his website in a minute, says, and this is just quoting him, this is not one of those he said, she said, when reasonable people can disagree in whether the PCE or the CPI is a better price index. This is a pay productivity gap being invented by using the slowly moving price index to make worker productivity look better and the faster moving price index to make real wages look lower. That's not kosher. You need to use the same type of index for both lines on the graph. So this isn't controversial. This isn't some free market idea about how you do graphs. This is just common sense. If you're deflating two graphs and comparing them, you should be deflating by the same thing, by the same variable. So that's reason number two. When you deflate by the same variable, by the same index, whatever index you use, again, the gap now is dramatically. Third, and this is one that they do a lot in the studies of inequality. What does hourly compensation mean today? Well, for many people, hourly compensation, the way they do it in the graph, hourly compensation means wages. Wages, hourly wages, $7 an hour, $10 an hour, $50 an hour. But wait a minute. Over the last 40 years, a bigger and bigger and bigger portion of wages have been benefits, bonuses, overtime, all kinds of shift premiums. They don't calculate those. So hourly wages should include overtime, bonuses, shift premiums, employer benefits. And if you ignore those, then, yeah, wages have somewhat stagnated. Why? Because government has forced employers to give more and more and more benefits. And we know who pays for the benefits. Employers are not going to pay you more than you produce because the government is going to, because of government-forced benefits. What they do is they lower your wage, your dollar wage, and give you the benefits out of your own pocket. Nobody's paying your benefits. When you say, you know, I'm getting healthcare for my work, you know, yeah, they're providing it, but you're paying for it. Your employer doesn't pay your healthcare. You pay your healthcare with lower wages. So, again, if you want to honestly compare productivity to wages, then you have to include all these other elements within the wage. And when you do, and you adjust the, do the adjustment for inflation correctly. Include all workers, not just 80% of them, who happen to be the 80% who are lagging relatively in productivity gains. Then guess what the graph looks like? It looks exactly like it was before 1973. It looks productivity and wages match. They go up together, completely. I mean, none of this is science fiction. None of this. Now granted, you have to be able to dig into the numbers and see it to discover it. But once explained, this is pretty straightforward. This is a completely invented gap, invented by statistics, invented by use of numbers, and that has absolutely nothing to do with reality. And yet, if you tell a lie over and over and over again, if you tell it on television and if you tell it in the newspapers and if you tell it in debates into your friends and everywhere else over and over and over again, people start believing it. People start believing it. And it's stunning. It's stunning. What we need today, what I call the new intellectual, would be any man or woman who is willing to think. Meaning any man or woman who knows that man's life must be guided by reason, by the intellect, not by feelings, wishes, whims or mystic revelations. Any man or woman who values his life and who does not want to give in to today's cult of despair, cynicism and impotence and does not intend to give up the world to the dark ages and to the role of the collectivist using the super chat. And I noticed yesterday when I appealed for support for the show, many of you step forward and actually supported the show for the first time, so I'll do it again. Maybe we'll get some more today. If you like what you're hearing, if you appreciate what I'm doing, then I appreciate your support. Those of you who don't yet support the show, please take this opportunity. Go to Iranbrookshow.com slash support or go to Iranbrookshow.com and make a kind of a monthly contribution to keep this going. 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