I don't think you're being intellectually honest regarding your comments on US companies investing. Look back on your comments and you'll see that you and Migeru were responding with an invented term called "wealth capture", for which you provide no rationale, no data. There's a reason you won't find that term in the literature of reputable textbooks in these areas, it doesn't rationally fit in those fields.
clearly you can go to any S&P 500 firm and quickly see that superficially these firms are investing heavily in their businesses. If you were to actually dig deeper into these companies in the healthcare sector, you would find it's deeper than the numbers show at first review, because non strategic tasks (tasks not providing competitive advantage) are being farmed out more and more to specialist firms with expertise in those areas,,,,so the investments are actually on those companies balance sheets that are providing the services.
How can you think these new products can be developed without investment in R&D?--I gave just two examples. How can you think company sales grow, and GDP grow, without increasing investment in capital expenditures, On the latter I imagine you'll revert to GDP is a cooked up number,,,heuristic,,,,sigh.
Anyway, I think it's a good time to take some time off the site, because I don't like the tone of my comments. It will also give more time for these thoughts about "zero growth" to prove themselves wrong--though as these projections turn out to be inaccurate, quarter after quarter, one would think people would examine their fundamental premises. But seemingly not.
Jerome is, in addition, a Ph.D. economist and a by all accounts successful project finance banker. You can claim that he has a different "understanding of finance, accounting and econometrics" than you do, but I am not so sure about "lack" thereof.
In addition, I don't know why you hold textbooks in such high esteem. I have spent the better part of my life in academia and I can tell you textbooks suck with exceptions few and far between.
Now let's review what Jerome (and at least one other) have written here about wealth capture.
Politicians must stop listening to businessmen by Jerome a Paris, October 26th 2005
Businesspeople are narrow minded and focus, naturally enough, on their profits, often mostly on the short term numbers. The role of politicians is not to listen to them, but precisely to fight them and to defend the common interest (which usually includes the long term interests of these businesspeople) against that narrow quest for less immediate costs and constraints. Instead, we see politics increasingly captured by business interests. Wealth capture is not wealth creation
Instead, we see politics increasingly captured by business interests. Wealth capture is not wealth creation
This is a kind of adjunct or continuation to the subject and general ideas of the post here a few days ago by Jerome a Paris, with the theme "wealth capture is not wealth creation." The tone is different, as is perspective, coming from the U.S. But that's what makes a community fun. Since the Reagan years, the reigning economic orthodoxy in the U.S. and therefore in the globalized economy has become that economies succeed when the wealthy and corporations are free from taxes, government is virtually nonexistent except to subsidize favored corporations, and businesses cut costs by shedding jobs to countries where living standards are poor and labor is therefore cheap, and by forcing employees in western nations to work harder and longer for less pay and smaller pensions and health care support that can be disappeared at any time, while businesses spend freely on lobbyists, legal and illicit graft, and executive pay and perks, all in response not to the longterm health of a company, an industry or a polity, but to keep stock prices going higher by means of favorable quarterly reports.
Since the Reagan years, the reigning economic orthodoxy in the U.S. and therefore in the globalized economy has become that economies succeed when the wealthy and corporations are free from taxes, government is virtually nonexistent except to subsidize favored corporations, and businesses cut costs by shedding jobs to countries where living standards are poor and labor is therefore cheap, and by forcing employees in western nations to work harder and longer for less pay and smaller pensions and health care support that can be disappeared at any time, while businesses spend freely on lobbyists, legal and illicit graft, and executive pay and perks, all in response not to the longterm health of a company, an industry or a polity, but to keep stock prices going higher by means of favorable quarterly reports.
The Bush administration is convinced, in line with an increasing fraction of the Right, that both economics and international relations are zero-sum games. They may talk about "trickle down effects" or "rising tides lift all boats" to paint the image of a positive-sum game, but fundamentally what they are doing on the economic front is trying to shift the balance of economic wealth away from the middle classes towards the upper classes, and to shift spending away from investment towards consumption to increase the above wealth capture today. The USA are incredibly rich and such "rebalancing" can be on a large scale for quite a bit of time before it will have a material impact, but, make no mistake about it, it will have an impact on the future well being of the country. Debt, to be paid down by later generations is one thing, but the lack of investment in the infrastructure of the future will mean lesser opportunities for all later on (and the weight of debt makes it harder to correct this when it becomes an issue). More insidious in the general loss of trust in government and other institutions, which will increasingly be seen as unfair and dangerous by individuals, who will revert to time-tested, but less effective means of economic regulation - trusting only family, friends or neighbors, investing with a shorter time horizon, demanding collateral.
They may talk about "trickle down effects" or "rising tides lift all boats" to paint the image of a positive-sum game, but fundamentally what they are doing on the economic front is trying to shift the balance of economic wealth away from the middle classes towards the upper classes, and to shift spending away from investment towards consumption to increase the above wealth capture today. The USA are incredibly rich and such "rebalancing" can be on a large scale for quite a bit of time before it will have a material impact, but, make no mistake about it, it will have an impact on the future well being of the country. Debt, to be paid down by later generations is one thing, but the lack of investment in the infrastructure of the future will mean lesser opportunities for all later on (and the weight of debt makes it harder to correct this when it becomes an issue).
More insidious in the general loss of trust in government and other institutions, which will increasingly be seen as unfair and dangerous by individuals, who will revert to time-tested, but less effective means of economic regulation - trusting only family, friends or neighbors, investing with a shorter time horizon, demanding collateral.
The model's principal characteristic in the United States has been the transfer of wealth to stockholders and managers, and away from public interests (by tax cuts) and employees (through wage-depression and elimination of employee benefits). My jaw actually dropped when I saw him write this. He saw the light! It's in black and white in the European edition of the New York Times! The transfer of wealth away from public interests and employees. In this perspective, what in France seems to be a sterile defense of an obsolete social and economic order might be interpreted as a premonitory appeal for a new but humane model to replace it. It could be Europe's opportunity. A number of you made fun of my claim that the French student's fight is very similar to your fights against the Bush machine in the US. And yet it is, in a very real sense. We are fighting the same ideology of wealth capture by the corporations from the workers and the State.
My jaw actually dropped when I saw him write this. He saw the light! It's in black and white in the European edition of the New York Times! The transfer of wealth away from public interests and employees.
In this perspective, what in France seems to be a sterile defense of an obsolete social and economic order might be interpreted as a premonitory appeal for a new but humane model to replace it. It could be Europe's opportunity.
A number of you made fun of my claim that the French student's fight is very similar to your fights against the Bush machine in the US. And yet it is, in a very real sense. We are fighting the same ideology of wealth capture by the corporations from the workers and the State.
"You don't need an equitable distribution to have a sustainable recovery," said Jared Bernstein, a liberal economist in Washington. The common wisdom of the Reagan years has now spread to "liberal economists": wealth capture by the upper classes is okay.
The common wisdom of the Reagan years has now spread to "liberal economists": wealth capture by the upper classes is okay.
wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's. UBS, the investment bank, recently described the current period as "the golden era of profitability."
Looking like this:
I'll dig up the updated version, which looks even more striking, later. In the long run, we're all dead. John Maynard Keynes
