| TI: Total income, TPI : Total placement income, TLI: Total labor income = TI – TPI ROP: Investment Profitability, PP: Productivity of placements in capital, TIP’ : profitability of the overall income ROP = PP * TIP’ |
|---|
1. When is there maximization?
There is maximization of one of the terms of a relation when its increase tends to be normally greater than that of the other term or of each of the other terms.
2. The argument of the previous proposition demonstrates that maximizing total labor income, TLI, is possible.
This possible maximization is not only in relation to total placement income, TPI, but also, contrary to what is often estimated today, relation to total income, TI. Its main constraint is the adequacy of total placement income, TPI, in order to restore or maintain full employment.
3. Let us illustrate numerically the dynamics of distribution when it maximizes labor income, TLI.
For this numerical illustration, let us use a table containing a reminder of the meaning of the abbreviations and formulas used in this chapter:
| TI: total income, TPI: total income from placements, TLI : Total labor income = TI – TPI ROP : Investment Profitability, PP : Placement Productivity, TIP’ : profitability of the overall income ROP = PP * TIP’ | |||
|---|---|---|---|
| Year | % change | ||
| ROP | |||
| PP | |||
| TIP’ | |||
| PS | |||
| TI | |||
| TPI | |||
| RT |
4. Let us consider a period of forty years and enter four data relating to year 1:
| TI: total income, TPI: total income from placements, TLI : Total labor income = TI – TPI ROP : Placement Profitability, PP : Productivity of placements in capital, TIP’ : profitability of the overall income ROP = PP * TIP’ | |||
|---|---|---|---|
| Year | % change | ||
| 1 | |||
| ROP | |||
| PP | |||
| TIP’ | |||
| PS | 200 | ||
| TI | 300 | ||
| TPI | 20 | ||
| TLI | 280 |
These data are consistent: 300 – 20 = 280
5. Let's calculate the relative values for year 1.
| TI: total income, TPI: total income from placements, TLI : Total labor income = TI – TPI ROP : Investment Profitability, PP : Productivity of placements in capital, TIP’ : profitability of the overall income ROP = PP * TIP’ | |||
|---|---|---|---|
| Year | % change | ||
| 1 | |||
| ROP | 10% | ||
| PP | 1,5 | ||
| TIP’ | 6,7% | ||
| PS | 200 | ||
| TI | 300 | ||
| TPI | 20 | ||
| TLI | 280 |
ROP % = (20 / 200) x100;
PP = 300 / 200 ;
TIP’ % = (20 / 300) x100.
6. Let's fill in the "Year 40" column.
| TI: total income, TPI: total income from placements, TLI : Total labor income = TI - TPI ROP : Investment Profitability, PP : Productivity of placements in capital, TIP’ : profitability of the overall income ROP = PP * TIP’ | |||
|---|---|---|---|
| Year | % change | ||
| 1 | |||
| ROP | 10% | 10% | |
| PP | 1,5 | 2 | |
| TIP’ | 6,7% | 5% | |
| PS | 200 | 250 | |
| TI | 300 | 500 | |
| TPI | 20 | 25 | |
| TLI | 280 | 475 |
The figures for year 40 are as consistent with each other as those for year 1.
7. Let's calculate the changes from year 1 to year 40.
| TI: total income, TPI: total income from placements, TLI : Total labor income = TI - TPI ROP : Investment Profitability, PP : Productivity of placements in capital, TIP’ : profitability of the overall income ROP = PP * TIP’ | |||
|---|---|---|---|
| Year | % change | ||
| 1 | |||
| ROP | 10% | 10% | 0 |
| PP | 1,5 | 2 | + 33 |
| TIP’ | 6,7% | 5% | - 25 |
| PS | 200 | 250 | + 25 |
| TI | 300 | 500 | + 66 |
| TPI | 20 | 25 | +25 |
| TLI | 280 | 475 | +70 |
In income (last three rows), the largest change is in total labor income (TA).
8. The divergent evolutions of TLI and TPI are experimentally verified.
In a country such as metropolitan France, the average or median wage, expressed in kilos of white bread or in the number of consultations with a general practitioner, in 1800 and 2000 respectively, is close to what the variation in the TLI has been in two centuries. This positive variation is out of all proportion to what the positive variation in the PDR over the same period may have been. For this not to be the case, it would have been necessary, for example, if, for example, the average or median wage expressed in kilos of white bread or in the number of visits to a general practitioner had been multiplied by 50, the ROP would have gone from the year 1800 to the year 2000 from 4% per year to an order of magnitude of 200% per year.