Re:The Geography of U.S. Inequality
by rayiner on Tuesday September 06, 2016 @10:28AM
(#12436220)
You're confusing two different things. Theories of markets say that in the long term competition will drive profits in any given industry to a nominal level. They don't say that the people who already have capital won't be able to use that capital to keep riding the wave of large profits in industries before they hit equilibrium.
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Re:The Geography of U.S. Inequality
by yummyfajitas on Tuesday September 06, 2016 @11:39AM
(#12436776)
Actually it's you who is confused. The return on capital is currently very low in most sectors, and people who have capital have no particular ability to keep profits high.
Income inequality is primarily about two things: earned income and capital gains from housing wealth. The latter is a non-competitive market due mainly to NIMBYs keeping supply artificially low.
The only think I'm confused about is what 'long term' means.
Seems like this has been trending since at least the 80's.
How long does/should the wave of large profits last until we recognize it as a symptom of a problem?
No theory of markets says that in the long term "profits" in general go to zero. Just profits in competitive industries. E.g. steel used to be very profitable. Not so much now. PCs used to be very profitable. Now profits in the PC industry are nominal. But there are always new industries that haven't hit that equilibrium yet.