Network News

X My Profile
View More Activity
Posted at 2:46 PM ET, 11/24/2010

The real story on corporate profits, cont'd

By Ezra Klein

Kevin Drum doesn't buy Justin Fox's argument that multinationals and financial companies are driving corporate profits, and he's got a graph that makes his point:

blog_corporate_profits_2010_q3.png

It's strictly domestic profits (i.e., it doesn't include overseas profits from multinationals), and although it doesn't say so, I assume it shows pretax profits, so it's not driven by differences in how companies play games with the tax code. And what it shows is a pretty similar trajectory for both financial and nonfinancial profits: they're both up sharply, and they're both just slightly below their 2006 peaks. There's no breakdown in the chart between big and small nonfinancial companies, but there's also no special reason to think the numbers are wildly different.

The numbers Fox was using to show the decline of domestic, non-financial, corporate profits went all the way back to the '40s, and the peaks he pointed out were in the '40s, '50s and '60s. So though it might be true that the country is now more dependent on profits from financialized and internationalized firms, those firms are not necessarily recovering from the recession any quicker than more traditional firms.

The long-running trend of financialization and internationalization is, in that telling, interesting, but not a viable explanation for business's tense relationship with the Obama administration. For a stab at that, see the end of this post.

By Ezra Klein  | November 24, 2010; 2:46 PM ET
 
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: How polarized are we?
Next: Three ways Democrats are going back on the offense over health-care reform

Comments

U.S. corporate profits, whatever the source, are not ending up in American workers' pockets nor are they being invested here in the U.S.

There is an investment gap that needs to be filled that is not being met by the private sector, or the economy will only stagnate and get worse. It is best stated by Brian Hilliard, Chief Economist, Societe Generale, UK:

"Level of income growth is insufficient. One of the most striking features of this recession and then recovery has been that all the growth has generated revenues which have stayed with companies. They havn't passed it on in labor income and they haven’t invested. And that's weak for growth overall." - Nov. 23, 2010, CNBC

Krugman is totally correct to have been calling for more Washington pump priming, as is Ben Bernanke, a student of the Great Depression.

I say give the Republicans their tax cut for the rich in exchange for a massive DOMESTIC jobs bill for the rest of us. It is no coincidence that the U.S. dollar has strenghtened as the Euro sinks ever deeper. Bond vigilantes can't attack the dollar the way they can plunder tiny European countries.

I would not be surprised to see a major depression in Europe at the rate they are going. We cannot afford to make the same mistake.

Posted by: ReubenfromDenver | November 26, 2010 11:03 PM | Report abuse

Justin Fox is a smart guy, but his current position makes him the living embodiment of Upton Sinclair's law:

"When a man's paycheck depends on his not understanding something, you can depend upon his not understanding it."

Posted by: tc125231 | November 27, 2010 8:38 PM | Report abuse

"Matt Taibbi sums up where we are, and just who our political leaders are emulating in the first chapter of Griftopia:

These leaders are like the drug lords who ruled America's ghettos in the crack age, men (and some women) interested in just two things: staying in power and hoovering up enough of what's left of the cash on their blocks to drive around in an Escalade or a 633i for however long they have left. Our leaders know we're turning into a giant ghetto and they are taking every last hubcap they can get their hands on before the rest of us wake up and realize what's happened.

SNIP

If American politics made any sense at all, we wouldn't have two giant political parties of roughly equal size perpetually fighting over the same 5-10 percent swatch of undecided voters, blues versus reds. Instead the parties should be broken down into haves and have-nots - a couple of obnoxious bankers on the Upper East Side running for office against 280 million pissed-off credit card and mortgage customers.

If only.... Of course the bankers wouldn't bother to run, when they can afford to hire people to do that kind of messy work for them.

Now this isn't to say the rest of the country has quite awakened yet to the fact that our political parties are about as relevant in the face of this vast wealth transfer as the battle between Coke and Pepsi is to living a full and rewarding life. Think about the big stories in the last few months - at least as far as the media is concerned - and what do we get? Ground Zero Mosque. Gate Rape at the Airports by the TSA. Dancing With The Stars Tea Party Edition. Mid Term election attack ads warning of the female Anti-Christ Nancy Pelosi leading illegal aliens in an attempt to make our kids gay. Hopeful/desperate news stories that Americans will Christmas shop the country back to prosperity....

The question isn't how much longer this can go on. The question is: when it will all finally collapse from its own internal contradictions, like all the other bubbles and Ponzi schemes out there - and what will we do when it does?"


Body=http://www.dailykos.com/storyonly/2010/11/27/923678/

-Pack-It-In-AmericaYoure-Done

Posted by: wdsoulplane | November 28, 2010 8:49 AM | Report abuse

"Matt Taibbi sums up where we are, and just who our political leaders are emulating in the first chapter of Griftopia:

These leaders are like the drug lords who ruled America's ghettos in the crack age, men (and some women) interested in just two things: staying in power and hoovering up enough of what's left of the cash on their blocks to drive around in an Escalade or a 633i for however long they have left. Our leaders know we're turning into a giant ghetto and they are taking every last hubcap they can get their hands on before the rest of us wake up and realize what's happened.

SNIP

If American politics made any sense at all, we wouldn't have two giant political parties of roughly equal size perpetually fighting over the same 5-10 percent swatch of undecided voters, blues versus reds. Instead the parties should be broken down into haves and have-nots - a couple of obnoxious bankers on the Upper East Side running for office against 280 million pissed-off credit card and mortgage customers.

If only.... Of course the bankers wouldn't bother to run, when they can afford to hire people to do that kind of messy work for them.

Now this isn't to say the rest of the country has quite awakened yet to the fact that our political parties are about as relevant in the face of this vast wealth transfer as the battle between Coke and Pepsi is to living a full and rewarding life. Think about the big stories in the last few months - at least as far as the media is concerned - and what do we get? Ground Zero Mosque. Gate Rape at the Airports by the TSA. Dancing With The Stars Tea Party Edition. Mid Term election attack ads warning of the female Anti-Christ Nancy Pelosi leading illegal aliens in an attempt to make our kids gay. Hopeful/desperate news stories that Americans will Christmas shop the country back to prosperity....

The question isn't how much longer this can go on. The question is: when it will all finally collapse from its own internal contradictions, like all the other bubbles and Ponzi schemes out there - and what will we do when it does?"

//www.dailykos.com/storyonly/2010/11/27/923678/

-Pack-It-In-AmericaYoure-Done

Posted by: wdsoulplane | November 28, 2010 8:51 AM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge washingtonpost.com's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.




characters remaining

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company