- Links for 10-25-14
- 'What Path for Development in Africa -- and Elsewhere?'
- Market Power, 'the Profits-Investment Disconnect,' and the Mal-Distribution of Income
- 'Redistribution Between Generations'
Posted: 25 Oct 2014 12:06 AM PDT
Posted: 24 Oct 2014 11:11 AM PDT
Posted: 24 Oct 2014 10:02 AM PDT
Maybe we'll finally start discussing something I've been writing about for years with little traction, how market power affects the distribution of income (the disconnect between income and the contribution to final product that occurs when market power exists):
The Profits-Investment Disconnect, by Paul Krugman: I caught a bit of CNBC in the locker room this morning, and they were talking about stock buybacks. Oddly — or maybe not that oddly, given my own experiences with the show — nobody brought up what I would have thought was the obvious question. Profits are very high, so why are companies concluding that they should return cash to stockholders rather than use it to expand their businesses?
After all, we normally think of high profits as a signal: a profitable business is one people should be trying to get into. But right now we see a combination of high profits and sluggish investment...
What's going on? One possibility, I guess, is that business are holding back because Obama is looking at them funny. But more seriously, this kind of divergence — in which high profits don't signal high returns to investment — is what you'd expect if a lot of those profits reflect monopoly power rather than returns on capital.
More on this in a while.
Posted: 24 Oct 2014 09:41 AM PDT
Redistribution between generations: I ought to start a series on common macroeconomic misunderstandings. (I do not watch zombie films.) ... Here is one that crops up fairly regularly - that government debt does not involve redistribution between generations. The misunderstanding here is obvious once you see that generations overlap. ...
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