The chief executives of America’s 500
biggest companies … received an aggregate 6% pay raise last year,
which pales in comparison to their 54% pay raise in 2004.

The 2004-2006 year-over-year executive pay tracks pretty well with the private-sector decade-over-decade wages, even though they are two completely different standards of comparison.

The theory, more or less, requires the money supply to grow at some point; the trick is to do this at a rate that accommodates actual growth, and not so fast as to make lending unprofitable.

Over the past decade, real private-sector wage growth has scraped bottom
at 4%, just below the 5% increase from 1929 to 1939, government data
show….

In other words, we are experiencing a steady and long term decline in total real wages

Corporate profits redistributed to stockholders participate in the economy exactly as much as corporate income paid to employees does. The economy angle is a red herring.

http://www.infoplease.com/ipa/A0774473.html
You may want to say this is unrelated to the concurrent rise in unemployment, but I think a significant number of economists will argue against that idea.
http://data.bls.gov/timeseries/LNS14000000

Going into the Great Depression, the U.S. was a net EXPORTER and a net CREDITOR.

Today, the U.S. is a net IMPORTER and a net DEBTOR.

Coming out of the Great Depression, the U.S. was one of the few remaining industrial powers. Western Europe and Japan were (temporarily) ruined industrially. The Soviet bloc closed itself off to Western industry. The rest of the world was mostly pre-industrial and preoccupied by anti-colonial struggle.

That isn’t the case coming out of the “Great Recession” … We’ve never faced as many industrial competitors as we do today.

During the Depression-era, the majority of the populace was engaged in jobs that resulted in physical output: agriculture, industry, commerce.

Today, agriculture, industry and commerce are outflanked by FIRE (finance, insurance, real estate), education, healthcare and other “non-productive” (in the physical output sense) sectors of the economy. In short, prosperity in the primary/secondary sectors of the economy is a prerequisite for prosperity in the tertiary sector … yet, currently in the U.S., the primary and secondary sectors are shrinking while the tertiary sector is expanding.

During the Depression era, most banks were geared towards either (1) direct investment in tangible assets or (2) savings, loans and the typical consumer-oriented business of retail banking.

Today, the biggest profits in finance come from arbitrage, investment in non-tangible assets (i.e. CDOs and other similar securities) and leveraged buy-outs.

During the Depression era, currency exchanges were fixed or based on precious metals.

Today we have QE1 and QE2.

As you wrap your head around these differences, I think it’ll become clear why Keynesian stimulus was/is doomed to fail, regardless of the scale. It’s an outdated model geared for an economy that is *radically* different than our own.

These policies might put more money in the pockets of individuals who are *already working* but they would not necessarily alleviate the unemployment situation. In fact, many economists would suggest that a higher minimum wage and an expansion of unions would likely exacerbate unemployment. I know that the small firm I work for (which is not generating a profit currently) would likely have to replace some full-time personnel with part-time personnel were the minimum wage to go up significantly. I’d imagine there are a lot of businesses in the same boat.

The only policy suggestion of yours that I could see really alleviating unemployment would be “an aggressive industrial policy.” My question, however, is what does an “aggressive industrial policy” mean to you? You throw it out there but don’t elaborate at all. The reason I ask is, of course, because the countries that have been the most successful with industrial growth over the past decade or so have all been countries with low labor costs (low wages), which you’re clearly against.

I’m actually curious what an American “Marxist” economist has to say about the disjunction between labor costs in the US/Europe/Japan and labor costs in East Asia and Latin America. This is a major topic of discussion in diplomatic meetings as of the past 2 years. I put “Marxist” in quotes because most Third World Marxists that I know would argue that the U.S. economy is such a basket-case in part due to the fact that labor costs are so high relative to the country’s physical output. That, if it weren’t for the dollar’s status as reserve currency (which shields it from a great deal of inflation – witness QE1 and QE2, which would’ve ruined any other country; instead, our creditors are forced to buy more dollars to protect their existing holdings) and for the hegemony of Wall Street internationally, then American wages would be even lower. That’s the anti-imperialist argument. It’s also a far more powerful explanation for the incongruity between corporate earnings and wages. You’re assuming all U.S. corporate profits are generated domestically, which would support the idea that government benefits are bolstering them. That isn’t the case though. Especially when we’re talking about finance – much (if not most) of the profit generation is happening through foreign investment.

The economists surveyed by the Wall Street Journal aren’t in favor of further action either by the Fed or the Federal government because they somehow benefit from the decline in real wages? 

Huh?

(I’m not trying to be sarcastic or facetious. I really don’t understand.)

It is comparing increases in non-personal things to personal things.  The fact that a particular corporation’s profits has gone up is interesting, but not, in my opinion, comparable to the increase or lack thereof in a average wages of people.  It would be better to compare, say, the increase in the average wages of Fortune 500 executives during the same period.  I have no doubt the chart would look somewhat similar, but it would be a cleaner comparison.