Thus, Piketty’s “findings,” as they are called, are reversed. The capitalists’ saving and investment that increases the ratio of accumulated capital to income, increases the wage share of national income and decreases the profit share.Someone tell him that corporate profits are through the roof, capital share is increasing and labor share is decreasing. Oh, I forgot, facts don't matter.
Ludwig von Mises Institute
Turning Piketty Right Side Up
George Reisman
4 comments:
Tom corporate profits are up for sure this is where I have the SP500 (globally btw...):
They have about $1T (equivalent) in earnings... out of this they:
1. pay out $500B (about half) as dividends to mostly state/county/local/union retirees pension funds, do you want these retirees to starve?
2. spend $350B on capex which increases productivity which increases overall living standards, is this bad? Is this not "doing things right"?
3. Save about $150B for a "rainy day" or buy-backs ... this $150B out of leading govt spending of $4.2T so saving only 3.6% of leading govt spending is this not unreasonable?
As long as govt at least sustains current spending flows (4.2T) or if by some miracle we get a 150B to 200B increase from these morons next year, I dont see how these firms will lose the capability to earn at this present rate....
rsp,
The Austrians alwasy have trouble with empirical research.
Matt, profits are taken after expenses are deducted from revenue, which includes the wage bill (total compensation including benefits). Aggregate compensation as a % of GDP has been pretty constant.
Deconstructing the figures shows that the declining share of ordinary workers is going chiefly to top management and techies as well as to increasing profit.
True, some is also going from wages to benefits, mostly health care owing to increasing costs. But that is not the full story.
Regular people, which is most employees, are seeing their take home pay — the way they pay their bills, save, and buy something extra if they can afford it — stagnant or declining, and lagging inflation in many cases. Then there are the unemployed, the underemployed, and those not participating that aren't counted and either hung out to dry or put on the dole.
Finally, there are the underpaid workers, the working poor, that are subsidized by the dole. This is a growing cohort.
Reisman needs to put on his reading glasses and look at the data instead of introspecting and pontificating.
"The capitalists’ saving and investment that increases the ratio of accumulated capital to income, increases the wage share of national income and decreases the profit share. But if the opposite happens then it's because capitalists are inherently superior and they deserve it. Either way, whatever, just cut taxes on the rich."
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