Upward mobility more important than equal wealth?

A scholarly article by a professor of economics argues that opportunities of moving up the economic ladder are more important than inequality in earnings. " For instance, while we have talked incessantly about the disproportionate gains of the top 1%, the wage slowdown in the US in recent decades is a bigger problem for most people. Since 1973, for workers as a whole, wages have stagnated largely because of a severe productivity slowdown," he writes. That is confusing because productivity is defined as output per unit of input which means a rise in output while the number of workers remains the same. Does it follow that workers will be paid more if profits rise because of increase in output? What if the output has risen because of greater automation, with robots replacing humans? As competition for jobs rises among people they lose the power of bargaining for higher wages. It is also possible that while productivity has slowed down in the US it has been compensated for by a massive rise elsewhere in the world, namely in China. China has become the factory of the world which has provided jobs to millions and has resulted in a huge jump in per capita income. Per capita GDP has doubled from 2006 to 2014, showing the rise in productivity. US companies have shifted production to China so, in a globalised world, a rise in productivity in one country probably results in a compensatory fall elsewhere. On the other hand, another professor writes that despite very low interest rates the level of investment in rich countries is below what it was before the financial crisis of 2008, resulting in high levels of unemployment. " Economists such as Robert Gordon and Tyler Cowen argue that the technological breakthroughs of the past, including piped water, air conditioning and commercial air travel, had a greater social impact than many of today's advances," he says. Others do not agree. They counter that companies such as Google, Wikipedia, Twitter, Facebook and YouTube have made our lives extremely productive but because their services are for free they are not counted in the GDP of the nation. Hence, they say, we should change the way of calculating GDP. Increasing social mobility should be much easier for India than it is for the US because we start from a very low base and, as China has shown, large numbers of young people can provide the workers needed for a huge boost in manufacturing. Unfortunately, services account for almost 60% of our economy, but offer low paid jobs. NREGA maybe called an employment scheme and may increase rural demand but is a handout and does not increase productivity. Education will be a great stimulus for India even if it is not increasing wages in rich countries. Manufacturing, education and a drastic reduction in corruption will make us rich. Mr Modi has targeted all of them. Wish him success.