Since 1990, Corporate Profits Up 200%, Household Income Up 2% - BCA

Discussion in 'Economy' started by Toro, Jun 8, 2011.

  1. Toro
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    Toro Diamond Member

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    Corporate Profit Gains at Labor's Expense May be Hitting Limit - Barrons.com
     
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  2. Sallow
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    Sallow The Big Bad Wolf. Supporting Member

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    Yep.

    That deregulation low tax thing is working just fine.

    Just as Conservatives planned.
     
  3. Toro
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    Toro Diamond Member

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    BCA attributes the increase in corporate profits to an increase of corporate profits from abroad, rising from 20% of total profits in 1990 to 35% today, partly due to a weakening dollar; an increase in financial profits; and aggressive tax avoidance schemes, some of which are egregious and should be shut down IMHO.
     
  4. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    So thats why we had to take money from the individual taxpayers and give it to big corporatoins. Now I get Obama/Bush's TARP/BAILOUTS/Stimulus spending :lol: /sarcasm
     
  5. CrusaderFrank
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    CrusaderFrank Diamond Member

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    What do you think this metric means?
     
  6. Mad Scientist
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    Mad Scientist Deplorable Gold Supporting Member Supporting Member

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    Get rid of NAFTA and GATT, impose tariffs.
     
  7. CrusaderFrank
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    CrusaderFrank Diamond Member

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    Does it take into account the recent successes of Obama's and Democrats Progressive Jihad on Free Enterprise that has driven record numbers into poverty and food stamps?
     
  8. expat_panama
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    expat_panama Silver Member

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    --or so says the Barrons pundit. None of the BCA website and Martin Barnes hits have the original article. Assuming Barrons isn't making this up and there really was an article, then it would contradict BEA numbers showing that since 1990 corp profits tripled with worker pay doubling --part of the general long term productivity uptrend.
    [​IMG]
    OK, so lot's of loony lefties hate America's rich so much that they'd prefer things like they were in 1990 with no increases for anyone, but they're morons.
     
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  9. kiwiman127
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    kiwiman127 Comfortably Moderate Supporting Member

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    I'll go with the Department of Labor's Statistics.

    The Specter of Wage Declines

    Today’s jobs report is not as encouraging on wages as it is on jobs. That’s something of a reversal: for most of the past three years, the wage trends have been better than the employment trends. The economy could now be headed into a period in which unemployment is falling but wages are not keeping with inflation.

    Back in 2008, in the early stages of the recession, average hourly wages were still rising more than 3 percent a year. In 2009, wage growth slowed, to about 2 percent, but inflation was nonexistent. In fact, prices were falling for much of the year, causing real wages to rise for most workers. In 2010, wage growth slowed further, to less than 2 percent, but inflation was still only 1.5 percent
    <snip>
    Inflation is now picking up, because oil and food prices have jumped. Wages have not picked up. They grew just 1.7 percent over the last year, the Labor Department said today. If the job market continues to strengthen, wage growth will accelerate. But it may not do so fast enough to keep up with oil and food prices. With the unemployment rate close to 9 percent, most employers don&#8217;t have to offer big raises to keep their workers &#8212; which is why the Federal Reserve should be much more worried about the economy being too weak than about it being too strong.

    The chart shows annual inflation versus annual average wage growth, since the recession began in December 2007. When the gray line is above the red line, it means wages grew faster than inflation over the previous 12 months. When the red line is above the gray line, it means inflation outpaced wages
    http://economix.blogs.nytimes.com/2011/03/04/the-specter-of-wage-declines/
    Click on the chart to enlarge:
     
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    Last edited: Jun 8, 2011
  10. Toro
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    Toro Diamond Member

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    Frankly, it surprised me a little bit as well.

    I believe household income comes from the Census data. This is median household income.

    [​IMG]

    I'm not sure what "worker pay" is in your graph. But there can be different explanations for the discrepancies, including

    - your graph is total pay, not per capita pay
    - an acceleration in household formation.
    - widening income disparities, which has been occurring
    - differing definitions of "income," i.e. personal disposable income does not include healthcare premiums, which has been rising faster than incomes and is compensation

    It should also be noted that Barnes (I believe) compares total corporate profits to median household income, which is a per capita measurement. By this standard, the two will always be mismatched.

    However, it is true that corporate profit margins are near all time highs, which means that shareholders are capturing a greater share of economic wealth. This should normalize over time in a truly free market economy, given that high profitability should attract new capital into the economy, hence the title "Is Capitalism Working Properly?" It isn't just in the US, either. Global corporate profits have been rising relative to total output for the past decade. Barnes isn't the only one making this argument. Jeremy Grantham has been making the same argument for some time.
     

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