What cannot diverge over the long term?
A number of pairs of economic variables cannot diverge over the long term, and if there is divergence, it must be corrected. The following pairs of economic variables come to mind: Wealth and income: persistently faster growth in wealth than in income would eventually lead to the disappearance of any buyers of assets (equities, real estate, etc.), as their prices w ould become too high; Real wages and productivity: persistently lower real wage growth than productivity growth would lead to huge excess corporate savings that have not been invested, and therefore to a collapse in growth; and also to a political crisis; Household debt and income: unlike public debt and corporate debt, household debt must be repaid, as households have a finite lifespan; Production costs in two countries with fixed exchange rates; if they diverge, one of the two countries will lose all its sectors exposed to international competition. So we know that if we see: Wealth growing persistently faster than income, asset prices will eventually collapse (example: Japan in 1990); Wages growing persistently slower than productivity, wages will eventually catch up (example: Germany since 2016); Household debt growing persistently faster than income, there will eventually be a household solvency crisis and deleveraging (example: almost all OECD countries in 2008-2009); Production costs increasing persistently faster in one country in a currency area than in another, there will eventually be wage austerity (internal devaluation) in the first country (example: Germany in 2000, Spain in 2009).