It’s amazing what you can find when you spend some time in table 2.1 of America’s National Income and Product Accounts.
As anyone following the debates about inequality has surely heard, income from owning capital has fluctuated dramatically as a share of total personal income:
Peter Orszag has a new column arguing that insufficient attention is being paid to “profits at some companies well in excess of what’s necessary to keep them in the market” as a source of inequality. This is far from being an original idea, although we appreciate Orszag’s citation of data on factory-level productivity.
However, we were struck by an odd omission. While Orszag is quick to note the importance of patents and land values, he leaves out any mention of the large subsidies enjoyed by the financial sector. (Orszag is paid several million dollars a year as a vice chairman at Citi.) That obscures a lot. Read more
Kudos to Krugman for attempting to explain to Pimco’s Bill Gross that return on capital is not something that can be taken for granted.
His comments follow remarks from Gross that capitalism “needs carry” to survive. Read more
Something very significant may be happening to labour and the capital reallocation process.
And arguably it’s down to technology and crowd-sourcing.
But before you shout: “this is what Marx always said, Ricardo and the Luddites were well ahead of you on that one”, we would propose what we’re talking about is a complementary trend not one that necessarily validates or duplicates what the above have said perfectly. Read more