The social partners should make proposals on the sharing of profits before July 15: Nicolas Sarkozy has just announced, after delivery by Jean-Philippe Cotis, Director General of INSEE, a report on "Sharing value added. " A report that highlights the stagnation of wages for years and the unequal distribution of profits. A more topical than ever, especially since the atrophy of wages is one reason for the crisis we are living.

Why did we get here?

The massive debt of U.S. households, but also British, and to a lesser extent on the countries of the Euro Zone, is one of the essential origins of the crisis (this is not

the only, see our previous articles). The household debt has reduced the creditworthiness of economic agents that we are. With an average debt of 170% of gross disposable income in the United Kingdom or 140% in the U.S., the inevitable collapse of household is a reality that could not escape. Recall that under the Euro Zone saw its debt ratio to achieve progress as now over 90% against nearly 65% in 1998 and therefore inexorably follows the many problems facing Americans. 

Faced with this alarming fact, some would argue that households were not simply to consume beyond their capacity to repay. However, the importance of consumption in GDP growth makes it a fundamental variable and necessary for our economies continue to grow. Consider a simple example that companies are investing, so that companies are hiring, it must create products that are consumed. The factors of production have a reason to exist until the time officials are ready to eat. The money from these sales and reduced costs then allow companies to redistribute income to the capital (shareholders and therefore owners of production tools) and labor input (employees of the company). The problem observed since the early 90s is a distortion of the distribution of wealth for shareholders and employees depends.

To illustrate this, we can see that in the countries of the Triad - the United States, Europe and Japan - Labor productivity since 1996 and until 2009 has always been superior to the evolution of real wages per head - to Except for a few months. This productivity has reached eg 2% by early 2006 to head the United States, while the real wages of individuals declined by 1%! Japan is even more alarming with a decline in real wages by 2% in 2004 when productivity per capita was positive in contrast to more than 2%. Recall that the real wage does not include house prices (which have risen much faster than wages, which amplify the figures above).

This deformation of revenue sharing has inevitably led to lower wages in GDP, an excess of savings and capital overaccumulation. This situation has resulted in the need for public policies to support the request. Faced with this challenge faced by the public authorities, the solution that was imposed was that artificially sustain consumer offering huge loans to households and enabling them to go into debt to consume ever more ... a painless way of raise the economic stagnation of their purchasing power despite increasing their productivity and to boost consumer spending!

With interest rates below the growth, the Monetary Institute (ECB, FED) have conducted a lenient policy allowing commercial banks to increase lending to households at a frightening pace (average increase of 10% annually), supporting and households into debt. Despite such policies, the share of consumption in GDP to decline significantly in the world to spend more than 68% in '91 to less than 64% in 2007!

We could continue to demonstrate this fact, this distortion of revenue sharing over the last twenty years to shareholders, but especially at the expense of employees and who is behind the massive private debt and the subprime crisis. Jean-Luc Gaffard (director of innovation and competition of the French Observatory of economic conditions) explained very clearly in his article "at the heart of the crisis": "widening inequality has been the consideration of the requirement of excessive cost of capital, which itself is behind the current crisis. "To support his remarks, the author proposes a graph very representative! share constituting 0.01% of the richest households in total Income in the United States was between 0.5 and 1% from 1940 to the 1980s. It rose in 1998 to 2.57%, a level that we had not seen since the 30s ....

Moreover, beyond "conflict" employee owners "pay differences between employees are really stretched. Economist Camille Landais said in an article in Les Echos that between 1998 and 2005 in France, the 0.1% richest had seen their salaries rise by nearly 30% against an increase of only 3% to 90% of the lowest paid employees.

Finally Jean-Marc Vittori (in "the era of patrons at a dollar," Voices, December 9, 2008) shows this distance wages that was created during the history between the rich and the poor: "Plato proposed a range of 1 to 4 between rich and poor. At the end of the 19th century, the banker John Pierpont Morgan argued that the wage gap between core employees and the leader of a company should go from 1 to 20. Henry Ford had put the range of 1 to 40 .... But from the 1980s, the story changes .... In the United States, the gap goes from 1 to 500 in 2000 and sometimes up to several thousand in the years following. "

Finally, analysis by Patrick Artus in these Flash Economics (number 142 and number 99), explains that the real wage "increase less rapidly since 1994 in the world than productivity. "The revenue sharing is deformed continuously at the expense of employees (except for 1999 and 2007-2008)," writes Patrick Artus. This nuance, however, the remarks by geographical areas and explain the decline in real wages by low productivity gains in France, Italy or Spain and the deformation of revenue sharing in the United States, Germany and Japan. Finally, the INSEE figures are stark. The share of wages in value added of nonfinancial corporations in France were close to 70% (slightly more or less depending on the year), it has now dropped 5 points to 65% in 2008.

Now we come to understand one of the origins of the crisis, let's look now into the rest of this article to find ways to balance the revenue sharing between shareholders and employees. Indeed, without political change against these distortions, new crises of this kind inevitably resurface as the United States, the United Kingdom or France are not willing to sacrifice their consumption of households and to follow the example of the economic model Japanese and German growth characterized by "relatively soft" based on exports. Nor should we forget that Germany and Japan suffer severely from the global economic crisis for an obvious reason: to export, you have countries ready to eat.

Some sketches solution ...

In the first part of the article we have highlighted the damaging effects of deformation of revenue sharing. It seems interesting now to try to propose some ideas that could restore a balance, saving our economy. Proposals emanating from all sides and in every sense, when unlike many economists see no concrete solutions to the inexorable imbalance.

The pressure exerted by the return on capital (and thus shareholders) no longer allows companies to have a vision of long-term investment. Profit maximization over periods of extremely short time required to lower costs (through lower wages for example) and the development of investment plans ephemeral but highly lucrative.

To avoid such situations, we may consider and propose a Democratic debate when to profitability "normative" or maximum a shareholder is entitled to expect the capital of capital. We could take this idea very well developed by Gael Giraud and Cecile Renouard in Book 20 proposals to reform capitalism (to consume without moderation).

The authors propose logically concluded that profitability "normal" one shareholder could match the interest rate without risk (the rate of Government bonds for example) to which a share average premium (historically determined and match the additional cost required by the shareholder precisely because of the risks he takes in being invested in equity markets). In this context, and without going into detail, a performance "fair" share of 15% can be considered very complimentary premium on shares of at least 10%!

From this level, a corporate tax sliding scale could be added to the tax rate classic. The authors consider such that beyond a "normal return" the CIT rate to 40% for up to 50% when the ROE (return on equity) exceeds 20%. The aim is twofold through this proposal.

First, avoid produce some companies in which only the return on capital, which is also dangerous very quickly. Examples include returns on shares offered by many companies just before the crisis. Furthermore, this rebalancing would undertake long-term investments and may thereby contribute to a rebalancing of the value added created by the company for employees - remember that wages go in the income statement of company.

Of course, it is necessary that governments, at the upcoming international summits, including that political cooperation is the only way to regulate a global economy that benefits very logical differences and tax competition between states.

Another idea, pay many leaders through the award of shares or stock options. Upgrade the work of the majority of employees could be done by awarding free shares. This would allow the company to attract employees to the performance generated. Moreover, the transformation of the wage share in reducing confrontations, rebalance income and enable the company to benefit from shareholder base "long term". The greater the share of employees in the company, the less the investor "speculators" will have no power over company policy and the boards.

To this some will reply that the company savings plans can already perform this type of function. We believe that the company should have obligations in this regard and that the compensation of the vast majority of employees do not enjoy this type of device. Establishing a legal framework at the international level would again prevent any "social dumping".

Finally, we return to this excellent book, 20 proposals to reform capitalism. The authors propose "to implement a regulatory framework leading the company can not grow the overall remuneration of the shareholders and officers more quickly than its share of profits it awarded compensation to the performance of its capital human person ". Again the role of governments is to allow companies to find the economic efficiency over the long term by promoting a fair distribution in the evolution of the distribution of wealth.

The upcoming international summits (including the G8 and G20) will be an opportunity to reflect on a common tax reform allowing states to resume their duties in the construction of economic models that we want for our children. And in particular, then discuss a more equitable distribution of income. The creation of global governance is the only way to rebalance the power relations between different agents (firms, households, United States). We return to these issues shortly.

We invite you to speak and to offer us solutions to the problems exposed! To your keyboards.

Sources: Patrick Artus, NATIXIS, flash 99: A global growth that is not "spontaneous" for nearly 15 years, indicating an excess of private saving and poor income distribution. Patrick Artus, Flash 142: Weakness in the purchasing power of wages: due to low productivity or deformation of revenue sharing. Jean Luc Gaffard, Occasional Economic Alternatives, "At the heart of the crisis: the inequalities" Gael Giraud and Cecile Renouard, 20 proposals for reforming capitalism Les Echos, Jean-Marc Vittori and Article: "UMP invites himself into the debate on shared values by advocating a shift in favor of employees' INSEE DATASTREAM