I haven't read the paper you link to, but the comment:
"A new working paper by Simcha Barkai, of the University of Chicago, concludes that, although the share of income flowing to workers has declined in recent decades, the share flowing to capital (ie, including robots) has shrunk faster. What has grown is the markup firms can charge over their production costs, ie, their profits. Similarly, an NBER working paper published in January argues that the decline in the labour share is linked to the rise of “superstar firms”. A growing number of markets are “winner takes most”, in which the dominant firm earns hefty profits."
...is about the third one I have seen lately that the current financial system is not good at doing what it is supposed to do: allocate capital investment.
I'm having a real hard time parsing that paragraph. Putting aside taxation, only two classes of people receive some share of income from production: workers & owners of capital. I don't understand how the income share could be declining for both classes simultaneously. Where is the 'missing' income going?
And bringing in the idea of winner takes all market structures just seems like a non-sequitur. I'm struggling to understand the causal relationship between market structure and the relative shares of income that go to labour and capital owners.
mcguire|9 years ago
"A new working paper by Simcha Barkai, of the University of Chicago, concludes that, although the share of income flowing to workers has declined in recent decades, the share flowing to capital (ie, including robots) has shrunk faster. What has grown is the markup firms can charge over their production costs, ie, their profits. Similarly, an NBER working paper published in January argues that the decline in the labour share is linked to the rise of “superstar firms”. A growing number of markets are “winner takes most”, in which the dominant firm earns hefty profits."
...is about the third one I have seen lately that the current financial system is not good at doing what it is supposed to do: allocate capital investment.
spangry|9 years ago
And bringing in the idea of winner takes all market structures just seems like a non-sequitur. I'm struggling to understand the causal relationship between market structure and the relative shares of income that go to labour and capital owners.