And now for something completely different...

[kandrathe]

The key is technological growth. If we can use technology to produce more with less than that same business can lower costs and maintain ROE.

And, it has. Automation and technology in business have skyrocketed the past 30 years, and yet we still expect a person to commute through rush hour to the job, arrive at 8am, take lunch from 12 to 12:30, and work until about 5:00pm, then commute home through rush hour again. It is customary, and unnecessary.

We also have a socio-economic system that only rewards the worker, so social stability rests upon achieving near 100% employment. But, with more and more technology, efficiency, and automation, the society needs fewer and fewer workers. Therefore, the excess workers in our society do meaningless "make work" jobs for meager wages. Technology has increased productivity which has allowed companies to shed jobs, and increase profits. But, through it all workers have lost the power to affect a social change. So perhaps we could rethink the nature of work to include something simple like, a four day, 30 hour work week, or additional vacation time per year.

Consider an isolated town with not imports or exports. If you have a stable population of say 100,000 people in a town, then it makes sense that you can sell them at most a stable amount of widgets, or services. That same 100,000 people have a fairly stable income, so their same "disposable income" would also be the target of all goods and services offered in that town. The only way to increase the economy would be to grow the population, or grow the pool of "disposable income". Barring population growth, the only means to grow the pool of "disposable income" would be to reduce the costs of living, and the costs of doing business. In other words, increasing the efficiency of the entire socio-economic system. The savings would be diverted into peoples pockets. There is of course a limit to how efficient a system can get.