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Worst. Socialist. Evahhhhhh.

Posted by WxDano none (My Page) on
Thu, Mar 28, 13 at 16:29

Economy built for profits not prosperity

By Lawrence Mishel : March 28, 2013

Newly released data on corporate profitability for 2012 show the continuation of historic levels of profitability despite excessive unemployment and stagnant wages for most workers. Specifically, the share of capital income (such as profits and interest, which are hereafter referred to as ‘profits’) in the corporate sector increased to 25.6 percent in 2012, the highest in any year since 1950-1951 and far higher than the 19.9 percent share prevailing over 1969-2007, the five business cycles preceding the financial crisis.

This historic share of income going to profits reflects historically high returns on investments, meaning more profit per dollar of assets. A higher profits share could result from an economy becoming more capital-intensive, where more assets are associated with each worker in the production of goods and services. However, the economy has become less capital-intensive since 2007 and is now only modestly more capital-intensive than it was over the preceding four decades. Profitability used to be lower when there was high unemployment, but in this downturn we have already seen the share of income going to profit exceed the high point reached in the last recovery or at any time in the last five recoveries. We now have an economy built to assure high corporate profitability even when it’s operating far below capacity and when most families and workers are faring poorly. This is further evidence that there is a remarkable disconnect between the fortunes of business and those best-off (high-income households) and the vast majority.

IOW: they are just moving paper around amongst themselves. They are not using labor, goods, or manufacturing to make money. What may be more remarkable than this is the fact that all these people with guns aren't at their doorsteps demanding change.


Follow-Up Postings:

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RE: Worst. Socialist. Evahhhhhh.

"IOW: they are just moving paper around amongst themselves. They are not using labor, goods, or manufacturing to make money"

Can that be true? I think it can be and is true of those playing the stock market, where they are playing a zero-sum game and nothing real is created. But when they cash in their chips the goods come out of the real market.

But the top one percent or five percent or whatever playing a zero-sum game among themselves? Not possible, they have to have access to goods and services performed by people outside their sector. However, I think it's quite certain that the top-percenters only need a small part of the population below them, the most productive ones to be exact. That is naturally the reality of a very few people controlling the great majority of the world's land, materials, and energy.

The reason people with guns are not at the doorsteps is because the bottom five percent of Americans, for example, and probably generally across the first world, are not quite at the bottom of Maslow's triangle. In the developing nations of course they are and so the powerful are overtly protected by paramilitaries.


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RE: Worst. Socialist. Evahhhhhh.

I agree Pat, and if you look at individual sectors in our economy, FIRE is taking up more and more oxygen. Carbon is still very profitable but service has tight margins and manufacturing is shrinking yearly. Derivatives and shuffling paper around on Wall St is the way to go.


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