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It compares wages which are a flow variable to the value of a stock market investment which is a stock variable.
Worse yet, it assumes reinvested earnings for the stock market investor but not the worker. In reality, a portion of a worker’s earnings end up being invested, if not in the stock market, then usually in real estate. A fair comparison would have included the returns for those investments also.
1 comment:
The graph is misleading.
It compares wages which are a flow variable to the value of a stock market investment which is a stock variable.
Worse yet, it assumes reinvested earnings for the stock market investor but not the worker. In reality, a portion of a worker’s earnings end up being invested, if not in the stock market, then usually in real estate. A fair comparison would have included the returns for those investments also.
Apples and oranges.
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