Applause from Noah Smith for Equitable Growth's attempt to focus on the broader implications of rising monopoly: Noah Smith: Economists Gear Up to Challenge the Monopolies: "The antitrust movement is making a comeback.... Think tanks like the Washington Center for Equitable Growth are starting to zero in on the issue as well": Jacob Robbins: How the rise of market power in the United States may explain some macroeconomic puzzles: "Gauti Eggertsson, Ella Getz Wold, and I at Brown University argue that these diverse trends are closely connected, and that the driving force behind them is an increase in monopoly power together with a decline in interest rates...
...The U.S. macroeconomic data of the past 40 years have produced a number of surprising, and indeed puzzling, facts.... Five of the most salient are:
- Financial wealth has increased rapidly despite no real increase in the amount of investment in the economy.
- The financial value of many firms now is permanently higher than the cost of their assets.
- At the same time, these more valuable firms haven’t invested more in their own operations or workforces despite higher profits and low interest rates.
- The average rate of return on capital has stayed steady while interest rates have dropped.
- The share of income going to labor (in the form of wages, salaries, and other kinds of compensation for work) has declined as the share of income going to profits has increased...
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