Wages as a percentage of GDP have stagnated while profits have doubled — with a huge portion of the extra half going for stock buybacks mainly to enrich the very few. Worth 90 seconds to watch billionaire Nick Hanauer lay it out.
(Later in the Q&A he says: “We think of the Fox Channel as rich people persuading middle class people to blame poor people. That’s sort of their business model.”)
I don’t like the way Elizabeth Warren demonizes rich people and corporations . . . as I wrote last month . . . but she was a Republican for half her life and believes in free markets (sensibly regulated) and vigorous competition.
A new book, reviewed by David Leonhardt in the indispensable New York Times, argues that the prices we pay are too high:
. . . The irony is that Europe is implementing market-based ideas — like telecommunications deregulation and low-cost airlines — that Americans helped pioneer. “E.U. consumers are better off than American consumers today,” Philippon writes, “because the E.U. has adopted the U.S. playbook, which the U.S. itself has abandoned.”
The European Union has created an impressively independent competition agency that’s willing to block mergers, like General Electric-Honeywell and Siemens-Alstom. In the United States, the process is more political, and companies spend vastly more money on campaign donations and lobbying. Lobbyists — and, by extension, regulators — justify mergers with dubious theories about money-saving efficiencies. Somehow, though, the efficiencies usually end up raising profits rather than lowering prices. . . .
. . . Philippon estimates that the new era of oligopoly costs the typical American household more than $5,000 a year.
The book: The Great Reversal: How America Gave Up on Free Markets. Leonhardt’s review is worth reading in full.
Quote of the Day
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.~H. L. Mencken
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