Restless Capital

Individual incomes in America have shrunk in recent decades while corporate incomes have bloated over the same period. This resulted in a shift from real economy to a speculative economy, where volatility rules. Some time back, S Gurumurthy made similar observations as this guy but came to very different conclusions:

It’s Consumer Spending, Stupid

By JAMES LIVINGSTON

Conclusion 1:

So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash.

Conclusion 2:

Using business profits to increase productivity and output — doesn’t actually drive economic growth. Consumer debt and government spending do. Private investment isn’t even necessary to promote growth.

Conclusion 3:

If our goal is to repair our damaged economy, we should bank on consumer culture — and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending.