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February 26, 2010

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Prateekbuch

Interesting analysis. I imagine that those not fortunate enough to be in the 'capitalist class' (i.e. 99% of people I guess) would look at this trend and feel uncomfortable, particularly given that it was this class' actions that lead to the current recession - and that they seem immune to the ravages of the slump they created.

Do you think (and I might be displaying Osborne-esque ignorance of economics here...) that profits could also be up because corporations are less accountable to their workers, the public and/or customers? An analogy I've used in the past is the amount of profit made by selling football shirts and video games - yes there's high demand so price is high, but profit margins are high because unaccountable companies divert more turnover to profit than re-investment or salary, essentially 'because they can get away with it politically.'

Of course, I am not an economist so what do I know... :-)

Mike Mathea

Prateekbuch, back to intro economics you need to remember that anyone who owns stock is a capitalist will benefit from a profit increase. Since all pension funds including government workers own stock the majority of us are capitalists.
Second, the reason for profit increases is the change in investment strategy by today's management. In the "bad old day's" managers stopped capital spending during recessions. They have changed their strategy so that during the last few recessions managers have continued to invest in productivity enhancing capital. The result is today firms can increase output without increasing labor. The result a rapid increase in profits during the early stages of the recovery. Both simple economics.

jameshigham

And it's been a great recession for the global oligarchical socialists such as the BIS, GS, JPM and so on. In fact, it is just about to get worse for us.

Chris Williams

Do the majority of 'us' have a significant share-holding through 'our' pension funds? I suspect that that depends on a number of assumptions.

Check out that dip in the graph in the mid-1970s. There's your powerful trade unions and militant working class right there. Sidney Pollard once told me about that dip, he did.

Luis Enrique

so what caused govt. tax revenues to fall?

I am surprised by this, my impression was that companies where announcing losses and sharp declines in profit - I can't see how profits/GDP can have risen.

I'm either misinformed or confused about what this data means

aion kinah

This is a great article. I’m new to blogging but still learning.I love your blog!

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