In the process of working on my book-in-progress, The Economic Consequences of the Pandemic, I’ve been trying to integrate a number of facts about the economy of which I’ve been more or less aware for a while, along with claims I want to make, and put them together into a coherent account of the economic system prevailing (in advanced/developed economies( in the 21st century and how it differs from the industrial goods economy of the 20th century.
As a step towards this, I’ve put together a list of factual claims which I think can be established reasonably firmly, along with claims I want to make that will be more contentious. My plan is to put this together into a coherent analysis, including supporting evidence. So, I’m keen to get good supporting links for any of these points (I have quite a bit, but more would be helfpul). I also want to be sure I’m not missing contrary evidence, and to adjust the claims if necessary, so please point this out also.
Facts (I think)
- Most economic activity in the 20th century, including services such as wholesale and retail trade, was fairly directly related to the production and distribution of goods
- This is no longer true: most economic activity is now related to human services, information services and finance, and these are at most indirectly related to goods production
- Real interest rates for government debt and high-grade corporate debt have been below zero since the GFC and seem likely to remain there permanently under current conditions
- Massive issues of government debt during the pandemic crisis haven’t changed this
- Net private business investment (non-residential) has been declining relative to GDP/national income since at least 2000
- Service industries less capital intensive than goods industries
- Information economy firms (Facebook, Google etc) invest very little even counting R&R
- Government investment in traditional infrastructure has been falling since 1970s, at most partially offset by private infrastructure
- Corporate profits high, mostly derived either from financial sector or from “intangible” assets in IT.
My claims
- Finance sector profits even higher if payments to managerial level in finance sector are treated as part of profit
- Intangibles = monopoly
- Revenue and profits in finance and Internet do not arise from sales to final consumers, and bear no obvious relationship to consumer welfare
- Implies similar regarding wages for market work
- Incentives don’t work in in this kind of economy (if they ever did)
- Unmet needs for public investment in human services: health, education, aged care, early childhood, social work
- Capacity to meet these through short term increase in public debt, long term increase in taxation
John Quiggin 
Elizabeth Currid-Halkett says …”inconspicuous consumption reproduces privilege in a way that previous conspicuous consumption could not.”
JQ said: “This is no longer true: most economic activity is now related to human services, information services and finance, and these are at most indirectly related to goods production” and “Intangibles = monopoly”
Article & book…
“Conspicuous consumption is over. It’s all about intangibles now
… “Knowing these seemingly inexpensive social norms is itself a rite of passage into today’s aspirational class. And that rite is far from costless: The Economist subscription might set one back only $100, but the awareness to subscribe and be seen with it tucked in one’s bag is likely the iterative result of spending time in elite social milieus and expensive educational institutions that prize this publication and discuss its contents.”
[ do you subscribe to The Economist JQ?]
“Perhaps most importantly, the new investment in inconspicuous consumption reproduces privilege in a way that previous conspicuous consumption could not.”…
https://aeon.co/ideas/conspicuous-consumption-is-over-its-all-about-intangibles-now
Elizabeth Currid-Halkett
…is the James Irvine Chair in Urban and Regional Planning and professor of public policy at the Price School, University of Southern California. Her latest book is The Sum of Small Things: A Theory of the Aspirational Class (2017).
https://press.princeton.edu/books/paperback/9780691183176/the-sum-of-small-things
Not to mention unmet demand for investment in environmental restoration and protection. Opportunities exist to capture a dividend from one-off consumptive use of irreplaceable environmental assets (woodchipping native tall forests in Tasmania) which could be pooled to fund restoration elsewhere. A long term per capita levy on tourism could help fund environmental work to underpin research into the sustainability of nature based assets which serve as a tourist attractor. Something along these lines applies on visitors to the Great Barrier Reef but should be applied much more widely.
Typo: R&R should be R&D (although Google is famous for their food 🙂
Need to qualify your first fact with:
“In advanced highly developed countries…” ( or words to that effect).
Developing countries already annoyed that we ‘first developed capitalist countries’ expect their economic development to be at our own stage of growth. Just like W.W. Rostow’s theories were said to be biased towards a western model of modernization, could you not be exposing yourself to the same criticism.
Again you need to sharply qualify your fact on business investment. Are you talking about planned or unplanned investment? The budget will promote unplanned investment but how efficient will that be if it is a rushed process? Will it actually increase multifactor productivity? Or will it be wasted on unproductive capital units, e.g., a flashy truck/car. Again are you even talking about replacement investment? Capital deepening and capital widening matter just as much as new business investment.
What are the impacts of robotization and AI advances on your fact about service industries being less highly capitalized?
The other facts seem less contestable. But qualify everything.
The claim that intangibles=monopoly is very interesting. I can’t wait to see you develop that claim. We have come a long way from the day when Alan Bond claimed that goodwill did not exist so he did not have to pay for it in his pub takeovers.
Your taxation claim is perhaps your most important one of the lot. Must convince voters that lower taxes are death on skates for social overhead capital. This is vital!
As for sources. I will keep my eyes open.
I think you should add that the privatisation of what were public and funded community services have moved to the private sector. So utilities, transport, and significant community services were now subject to profit making, not the provision of public goods. These movements have reduced the roles of government and probably contributed to the growth of citizen distrust of democratic models of governance. The problems of public health, the provision of inadequacies of aged care services and other such community requirements have added to the economic failures of the private service sectors to meet pandemic needs.
eva cox
“This is no longer true: most economic activity is now related to human services, information services and finance, and these are at most indirectly related to goods production”
While it is true that in most advanced economies like Australia , the service sector is the largest sector by far, this is mainly because we have outsourced the production of goods to countries where labour is cheaper. However the consumption of goods is still central to our economic activity: think of retail ( a service industry) that still mainly sells goods, the health sector that involves the consumption of a lot of consumables and drugs, transport etc… So my point is that even if services is a now a major component of economic activity, it would not survive without the availability of goods. This brings the question: what would happen to our economy if suddenly those goods were difficult to get?
Is it true that information economy firms invest little? They employ thousands of people writing software which is then used for many years.
*Some* ‘internet’ companies do get their revenue from end users: ISPs and streaming services for instance. As a consumer I get enormous value from gmail, Google search, Facebook, eBay, Amazon, PayPal and all the myriad of transactions I can now do on online.
Thanks for useful comments so far. Some responses
1. “do you subscribe to The Economist JQ?” In the circles where I move, a copy of the Economist would be the subject of derision rather than admiration (see also TED talks). These codes are indeed complex, though I don’t think this is something that has fundamentally changed since ancient times
2. I plan to have a whole chapter on the environment, and also to mention it here, along with energy transition
3. Thanks! I always welcome corrections like this, no matter how nitpicky
4. Lots of useful points here
5. I hinted at this point in relation to infrastructure, but will spell it out more
6. The relationship reverses as you go from retail (a service provided to the goods industry) to health (a service in which manufactured products play a vital, but still secondary role). Simiarly agriculture is vital to life, but it’s not a major share of employment or output any more.
7. You can check the ratio of market value to book value (cumulative investment). It’s about one for traditional manufacturing firms, over 20 for information economy firms. As regards Google and Facebook, you want them for the information, provided by other Internet users, to which they help you get access.
Sounds mostly right. We’d want to see how many of these assumptions hold in economies that are not dysfunctional. Places like Switzerland, Singapore, Holland and Luxembourg. However these countries may themselves be dysfunctional but only a little bit less so. We don’t want to assume that these developments are either good, natural or sustainable.
Sounds mostly right. We’d want to see how many of these assumptions hold in economies that are not dysfunctional. Places like Switzerland, Singapore, Holland and Luxembourg. However these countries may themselves be dysfunctional but only a little bit less so. We don’t want to assume that these developments are either good, natural or sustainable.
Does the first fact rely on data for traded goods and services? One recent trend has been shifting of previously untraded services like cooking and child care into the traded economy, so some of the reported increase in services is artificial.
Suggest checking out the latest data on the flattening of material product (Wiedmann).
Maybe a fact (not sure): Individual interactions between people count for more positive or negative happiness than any interaction based on trades of services or goods.
Seconding James Wimberley. A lot (not all) of the economic growth of the last few decades has not been the result of producing more goods or services, but of shifting the boundary between the monetised and non-monetised sectors of the overall economy. This produces more money. Childcare, privatised public services, Uber (and all the other delivery services), AirBNB, to a good extent Facebook, Google (reliant on user-provided content). More money has to go somewhere – into real estate, safe havens and so on. The general fall in investment would, in this view, be an indicator that we are not producing much more of anything except money.
Hi John,
I broadly agree with you on all this. A few comments and possible references;
I thought services had been dominant for longer than this, although their share has certainly increased over time.
You might want to look at the ABS; https://www.abs.gov.au/articles/services-australian-economy
and RBA https://www.rba.gov.au/publications/bulletin/2018/mar/structural-change-in-the-australian-economy.html#fn4 on this.
The yield on Treasury indexed bonds is negative out to 2050 so financial markets agree with you.
You might want to split investment into mining and non-mining to get a clearer idea of trends.
KPMG agree with you that tech firms don’t invest much relative to their potential to do so; https://assets.kpmg/content/dam/kpmg/uk/pdf/2019/07/investment-in-technology-innovation.pdf
The other side of profits being high is that the wages share is near its lowest value since quarterly national accounts started in 1959.
cheers
John
PS: Add care of the elderly as a sector with a big shift from unpaid to paid work.
Anecdatum on the winner-take-all model in sports, a major part of the service economy. I’ve just watched the mens’ singles finals in the French tennis Open, Nadal won: he takes home €1.6m. Djokovic lost: €800,000. Both are already rich men from years of success. The top prizes are down 30% from last year, to allow higher payouts lower down. A first-round loser got €10,000, just enough to live off for a month allowing for expenses. The new, more egalitarian ratio is still 160 to 1. At least it’s gender-neutral.
James W: The increase in women’s labour force participation, which drove most of the shift from unpaid to paid work, was over by 1990 in the US. Participation has dropped a little since then. https://fred.stlouisfed.org/series/LNS11300002
On the first two dot points of the original list. They are true relatively but absolute magnitudes still matter. The absolute rates of production and distribution in the economy are higher than ever. At least, they were before the COVID-19 pandemic. That means the burden of our economy on world ecology and climate was higher than ever. The relative shift to services does not matter in one sense; namely that the total climate and ecological burden was higher than ever. The total damage we are doing to climate and ecology matters more than anything else. The issues of sustainability or unsustainability and economic, societal and civilizational collapse hinge on that point.
In the statement(s) referencing economic activity, how is economic activity measured? If it is measured in dollars, even adjusted dollars, then it is meaningless relative to climate and ecological burden. The only meaningful measures in that arena are scientific measures. While we continue to conceive of an economy in dollar terms, we fail to take account of the important measures. The economy has to be conceived of in terms of ecological and human impacts. This takes science in SI units, not dollar economics.
Exogenous realities (the environment in other words) are about to refute not just neoliberalism but the entirety of capitalist (and state capitalist) economics. The collapse has begun. The USA is collapsing. Europe is collapsing. Many other places are too. China and some other parts of the Asia-Pacific region appear to be resisting this global collapse for the time being. How long this resistance will hold up is a matter for conjecture. In historical terms, it cannot be long.
Economics needs a complete re-visioning. Books written on the premise that the world and economics will go on much as before, and that dollar values measure anything real, will be rapidly left behind by historical events and new theoretical developments.
But I agree with most of the dot-pointed claims in the second list. Indeed, they bear a generic or family resemblance to the claims of Bichler and Nitzan in “Capital as Power.” That is to say, such claims by Quiggin are either an admission of an “historical phase failure” of money to value things properly (due to broad or even universal market failure) or an admission that money never valued things properly but that this only becomes flagrantly critical and obvious when limits to growth and environmental collapse begin to seriously disrupt the economic system.
John: “Service industries less capital intensive than goods industries”.
I would argue it may be the opposite, seen from the outside.
These days it takes 15-25 years of solid investment to produce a useful worker, which service businesses then lease in greater ratios than other sectors’ firms do. The FAGMANs are unusual in this regard.
The problem is that this investment in constructing workers is completely unaccounted for in standard macro, just like government investment.
So a matter of accounting choices. Very much a heterodox view I know.
hi john.
First time I have commented here – but always read your posts with interest.
I would offer a couple of thoughts..
One of the things that seems apparent to me is that technological change is rapidly changing the way we produce physical goods (I’m including things that we grow in this definition as well as manufactured goods), to such an extent that I could foresee a world in which most of these goods are produced with only minimal labour input – think of a fully mechanised mine, farm or factory. we already produce all the food we need in Australia with a very small workforce and once mechanical harvesting is perfected we will require even less.
the implications of this are to me pretty profound in that increasingly the returns to this production are earned by owners of capital with a smaller share going to workers. If you then start to factor in the increased potential for AI and automation to penetrate into the service sector then you have to wonder where we end up in a few years.
we cannot stop this (and nor would it be desirable), but we can us this change to rethink our economic models to at least partially break the link between formal employment and income. One way to do this could be to set up a sovereign wealth fund which would invest in owning part of these companies, returning dividends directly back to every Australian as a regular individual payment which would start low but increase over time. this would provide some level of minimal income which could supplement (or maybe over time replace) wages and benefits without imposing punitive levels of taxation.
Women’s participation in the paid workforce has stopped rising, but the shift goes on – Uber/Lyft etc monetise cars and the under-employed, AirBNB monetises spare rooms, Facebook monetises relationships….All since 1990.
“Real interest rates for government debt and high-grade corporate debt have been below zero since the GFC and seem likely to remain there permanently under current conditions.”
I interpret this fact to mean that governments and “safe” corporations can now borrow unlimited amounts of money, buy up assets (think reverse privatisation, think buying back the telecommunications and electricity sectors) and be paid for doing so by the suckers who lend them the money. Borrow a trillion or three, buy a trillion or three dollars worth of income-producing assets, which will pay back the loans and then some.
Am I thinking wrongly ? Governments are really very flat-footed aren’t they ?
It might be wothwhile checking out other OECD countries like France with much higher female participation rates, to get a handle on the magnitude of my suggested correction for monetisation.
Peter T: some of your cases are not examples of monetisation of previously non-traded services. Uber and Lyft did not replace informal ride-sharing but turned previously idle private cars into taxis. (Their employment practices are odious and their business models unsustainable, but that’s another story). Ditto for AirBnB. Online shopping and delivery have replaced physical retail shopping, not gift exchange.
“These days it takes 15-25 years of solid investment to produce a useful worker, ”
This is exactly the view I’m pushing.
Alan Hopkins: Thanks for thoughtful comments and glad you like the blog.
A coherent account of the economic system prevailing in advanced/developed economies needs to include a discussion on energy. Nothing happens without energy.
Earlier empires enslaved conquered populations and appropriated their resources. Then the high energy density benefits of coal came along at the beginning of the industrial age, then later, the more versatile petroleum oil-based fuels, and these energy resources undeniably out-performed any muscle-power from humans and animals. Fossil fuels became our slaves.
US petroleum geologist Art Berman posted on Oct 11 a piece at his blog headlined “Oil and the Changing World Order”, that includes:
“The extraordinary growth after 1945 was because of the widespread shift to petroleum as the primary energy source for the world. Because a barrel of oil contains the equivalent of about 4 1/2 years of human work, the resulting increase in productivity was the true cause for economic growth.”
https://www.artberman.com/2020/10/11/oil-and-the-changing-world-order/
With global oil and gas discoveries at record lows the days of some of our fossil fuel energy slaves are numbered.
See: https://www.rystadenergy.com/newsevents/news/press-releases/lowest-of-the-century-half-year-discoveries-total-4point9-billion-boe-hit-by-travel-bans-and-budget-cuts/
For alternative energy sources to effectively compete with petroleum oil, they must provide a similar affordable versatility, otherwise there will be a new world order of persistent negative growth as global oil supplies likely decline.
See: https://oilprice.com/Energy/Energy-General/Was-2018-The-Peak-For-Crude-Oil-Production.html
Is monopoly profit the right word to use with regard to the profits of the tech behemoths? ‘Monopoly’ implies bad and unethical, and implies suppression of competition. But in these cases the high profits are mostly due to the nature of the technology where there are such economies of scale that the first mover reaps enormous profits. Huge luck – yes. Unethical monopoly behaviour – probably not. There are good grounds for high taxes on super profits due to luck But the actual earning of these super profits is not immoral, whereas the earning of monopoly profits due to the suppression of competition is immoral.
And the label of ‘monopoly’ may also imply the best solution is the break up of the monopoly so as to ensure competition, whereas the solution that maximises utility may be nationalisation of the company, or at least the nationalisation of the super profits.
.
JQ said “2. I plan to have a whole chapter on the environment, and also to mention it here, along with energy transition”
Peter McQuillan says @ 3:42 PM
“Not to mention unmet demand for investment in environmental restoration and protection. ”
Cory Doctorow says “‘Technologists have failed to listen to non-technologists’”… “We’ve got 200 to 300 years of full employment for every working pair of hands, to do things like relocate every city on a coast 20km inland”.
+ please technologists (and modellers) please, listen to non-tech humans. A good read. And who here has heard of ‘jetpack socialism’!
“Interview
Cory Doctorow:
‘Technologists have failed to listen to non-technologists’
“Technologists have failed to listen to non-technologists. In technological circles, there’s a quantitative fallacy that if you can’t do maths on it, you can just ignore it. And so you just incinerate the qualitative elements and do maths on the dubious quantitative residue that remains. This is how you get physicists designing models for reopening American schools – because they completely fail to take on board the possibility that students might engage in, say, drunken eyeball-licking parties, which completely trips up the models.
“You’ve described yourself as a jetpack socialist. Is this jetpack socialism?
*I was more bullish on jetpack socialism or fully automated luxury communism before it was clear how much climate degradation we would endure before we took action. Now we’re not going to have technological unemployment. We’ve got 200 to 300 years of full employment for every working pair of hands, to do things like relocate every city on a coast 20km inland(*slr1-3*)[ and Greal Lakes too]. The extended amounts of labour ahead of us are more than any technology could offset.”
https://www.theguardian.com/media/2020/oct/10/cory-doctorow-technologists-have-failed-to-listen-to-non-technologists
*slr1*
“Rising waters threaten Great Lakes communities
…”But experts say the rush to armor the shoreline is exactly the wrong approach. Seawalls perpendicular to the shoreline trap sand and compound the erosion problem elsewhere. Those parallel to the shore can multiply the force of the waves, causing the same problem. In other words, efforts to stop erosion simply redirect erosion elsewhere, creating a need for even more armor.
“The more protection you put in, the less sand is available to the system,” said Scudder Mackey, chief of Ohio’s Office of Coastal Management. “You’re cutting off the sediment supply that creates and maintains the beaches. We’re in a vicious cycle.”
“Regulators know these structures are making the problem worse, but they have little choice but to rubber-stamp an application when a home is threatened.
“Because a landowner has the general right to protect property from erosion, applications get favorable consideration,” Reinke said. “Our regulations pretty much instruct us not to tell people, ‘Sorry, you have to pick up and move your house.'”
“Breaking The Cycle”…
https://phys.org/news/2020-10-threaten-great-lakes.html
*slr2*
“New elevation data triple estimates of global vulnerability to sea-level rise and coastal flooding
Scott A. Kulp & Benjamin H. Strauss
Published: 29 October 2019
“Abstract
…
“Under high emissions, CoastalDEM indicates up to 630 M people live on land below projected annual flood levels for 2100, and up to 340 M for mid-century, versus roughly 250 M at present. We estimate one billion people now occupy land less than 10 m above current high tide lines, including 230 M below 1 m. Kulp, S.A., Strauss, B.H. New elevation data triple estimates of global vulnerability to sea-level rise and coastal flooding.”
https://www.nature.com/articles/s41467-019-12808-z
*slr3*
“Shocking New Maps Show How Sea Level Rise Will Destroy Coastal Cities By 2050
https://www.forbes.com/sites/jimdobson/2019/10/30/shocking-new-maps-show-how-sea-level-rise-will-destroy-coastal-cities-by-2050/#102f27f7456c
Note JQ – The Fed is still doing ‘generations’. ** It’s just a pity that the presentation of the report encourages framing in terms of tired cliches of intergenerational conflict. The real issue, now and increasingly into the future, is the conflict between those with capital and those without.”**
Maybe you are already aware of this page JQ, yet this search tool seems a good resource for quick data generation for your process.
“Distribution of Household Wealth in the U.S. since 1989
Board of Governors of the Federal Reserve System
DFA: Distributional Financial Accounts
Share Full CSV
Overview
Distribution of Household Wealth in the U.S. since 1989
DistributionTable
Comparison
Select
– wealth component
– Wealth
– Assets
– Real estate
– Consumer durable goods
– Corporate equities and mutual fund shares
– Pension entitlements
– Private businesses
– Other assets
– Liabilities
– Home mortgages
– Consumer credit
– Other liabilities
Distribute by
– Wealth Percentile
– Income Percentile
– Education
– Age
– Generation
– Race
Units Levels ($)
Shares (%)
Table shown below:-
Wealth by generation
[Table with floating column headers – yay.]
https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:119;series:Net worth;demographic:generation;population:all;units:levels
** “Forget the generation gap – the gulf between rich and poor tells the real story of our times
John Quiggin
https://www.theguardian.com/commentisfree/2019/aug/26/forget-the-generation-gap-the-gulf-between-rich-and-poor-tells-the-real-story-of-our-times
JQ, you “also want to be sure I’m not missing contrary evidence, and to adjust the claims if necessary”.
Witness “Luigi Zingales, a finance professor at the University of Chicago Booth School of Busines”, who said recently “Big Tech’s value to GDP dwarfs Gilded Age monopolies’”? Who “has been acclaimed as “one of the most powerful defenses of the free market ever written” by Bruce Bartlett of National Review Online” one Luigi Zingales, a finance professor at the University of Chicago Booth School of Business.^3.
Time article below is the same pr handout as every other article I saw, which finishes with imo ‘wealth condensation’
– “But these wealthy individuals may just be the ones that will help lead the recovery. As the storm passes, a new generation of entrepreneurs looks likely to digitize, refresh and revolutionize the economy,” the report found.”^2.
… and UBS says “Great Polarization’ may be next for world’s richest”. [ as in my pole not yours]^4.
The hyperwealthy – all 2,000 of them are “likely to digitize, refresh and revolutionize the economy”, in their favour and who is going to put the brakes on them? Scomo – no. Trump – no. Johnston – no. EU – slightly maybe.
^1.
… re US Senate hearings July;
“Bezos, Zuckerberg Are Taking Tech Wealth to a Whole New Level
– “Wealth is soaring in tech industry facing antitrust hearing
– “Big Tech’s value to GDP dwarfs Gilded Age monopolies’
“We moved the brick-and-mortar economy to an online economy dramatically,” said Luigi Zingales(^3.), a finance professor at the University of Chicago Booth School of Business. “Probably the same thing would have happened in a longer period of time. Now it’s happening in weeks instead of years.”
https://www.bloomberg.com/news/articles/2020-07-29/bezos-zuckerberg-and-musk-have-made-115-billion-this-year
^2.
“World’s Richest People Are Now $813 Billion Wealthier Despite the Pandemic
“Despite the global economic shock, the world’s 500 richest people are a combined $813 billion richer now than they were at the beginning of the year, according to the Bloomberg Billionaires Index.
“Total billionaire wealth surged to a fresh peak of $10.2 trillion in July, up from $8.9 trillion at the end of 2017, according to the report findings. The heavy lifting came from the tech and health-care sectors, where fortunes jumped by 43% and 50%, respectively. Net worth among those in entertainment, materials, real estate and even finance, by comparison, grew at 10% or less.”
https://time.com/5897229/billionaires-richer-coronavirus-polarization/
– Reports done yearly by UBS & PWC
“Billionaires Insights 2020
Riding the storm – How are billionaires navigating the storm? What can be learned from them?
“Covid-19 hasn’t been the only development influencing our fates over the past year. But it’s certainly been the main factor, creating a storm bringing decades’ worth of change in a matter of months and profoundly impacting the global economy. The latest edition of Billionaires Insights from UBS and PwC suggests that the ultra-wealthy have been no exception.”
Click to access UBS-PwC-Billionaires-Report-2020.pdf
^3.
Luigi Zingales, a finance professor at the University of Chicago Booth School of Business
Charles M. Harper Faculty Fellow
ABOUT LUIGI ZINGALES
– co-developed the Financial Trust Index, which is designed to monitor the level of trust that Americans have toward their financial system.
– faculty research fellow for the National Bureau of Economic Research,
– research fellow for the Center for Economic Policy Research, and
– fellow of the European Governance Institute.
– director of the Stigler Center for the Study of the Economy and the State.
– serves on the board of ProMarket and
– co-host of the podcast Capitalisn’t.
– 2014 was President of the American Finance Association.
“In July 2015 he became the director of the Stigler Center at the University of Chicago which he is refocusing on promoting and diffusing research on regulatory capture and the various distortions that special interest groups impose on capitalism.
“His book, Saving Capitalism from Capitalists, coauthored with Raghuram G. Rajan, has been acclaimed as “one of the most powerful defenses of the free market ever written” by Bruce Bartlett of National Review Online. Of his latest book, “A Capitalism for the People: Recapturing the Lost Genius of American Prosperity,” the Financial Times has written “Zingales’ fundamental diagnosis is right.”
https://faculty.chicagobooth.edu/luigi-zingales/about-luigi-zingales
http://financialtrustindex.org/about.htm
****
^4.
‘Great Polarization’ may be next for world’s richest, UBS says
“The huge boost to the fortunes of technology and health-care billionaires during the coronavirus pandemic may be the beginning of a more permanent trend.
“The results cover more than 2,000 billionaires in 43 markets, accounting for 98% of billionaire wealth, UBS and PwC said. The researchers also conducted about 60 interviews with the ultra-rich.
https://www.livemint.com/news/world/-great-polarization-may-be-next-for-world-s-richest-ubs-says-11602031975218.html
“Real interest rates for government debt and high-grade corporate debt have been below zero since the GFC and seem likely to remain there permanently under current conditions”
Only if current conditions are permanent. If the conditions are permanent, then it’s not helpful to describe them as current, which implies temporary.
Yesterday, Alan Kohler posted an interesting graph suggesting globalization stalling from around… looks like 2006.
See: https://www.eurekareport.com.au/investment-news/globalisation-has-stalled/148787
Global ‘conventional’ crude oil production has been on a bumpy plateau since around 2005.
See: https://crudeoilpeak.info/2005-2018-conventional-crude-production-on-a-bumpy-plateau-with-a-little-help-from-iraq
Coincidence, or cause and effect?
@Smith9 What I meant to say was more like “under the policy settings that prevailed between the GFC and the pandemic”.
“Is monopoly profit the right word to use with regard to the profits of the tech behemoths?”
Yes it is. If you had been a fledgling software writer in the 1970’s could you have gotten a monopoly on the IBM operating system? Safe from all legal challenges? No you have to have some big power player behind the scenes choosing you out to play that role.
Were you an online retailer in the 90’s could you have gotten the finance system to give you cheap credit for at least two decades and deny all your potential competitors the same? Until you had captured so much in the way of network effects that your position was insurmountable? No of course not. The winners are chosen by high finance. They are from there on in agents of the debt-merchants. Bezos is in bed with the CIA. Facebook the same, involved in Orange revolutions, terrorism, and keeps a security apparatus somewhat akin to Saddam Hussein. None of these guys originate anything. They have been useless to the rest of us. They just grab all the loot with the help of the money and debt creators. The guys at google never gave us anything. Alta Vista were the innovators and when the guys running high finance saw those networking effects they said to themselves “we like this” and they picked the winners who now do their bidding censoring the rest of us.
Adam Smiths invisible hand can work. But monopoly finance breaks the invisible hands fingers in three places each and ruins everything. These guys aren’t like the genius producers in Ayn Rands novel Atlas Shrugged. You could kill every billionaire in the world now and the rest of us just throw a big street party. But things weren’t always this way. They were but not to this degree.
“Global Capital Is the Tail That Wags the U.S. Economic Dog
“Economists have long imagined that the free movement of capital around the world benefits the U.S. economy.
It doesn’t.
… “Much of Wall Street, for obvious reasons, will be ferociously opposed to policies that limit the unfettered flow of capital around the world, but the right polices can sharply reduce the economic disruption wreaked on workers, producers, farmers, and the middle class. And as was the case for most of U.S. history, they will force large businesses around the world once again to compete for profits by investing in domestic productivity, rather than by lowering wages.”
https://foreignpolicy.com/2020/09/29/capital-flow-united-states-economy-trade-deficit/