U.S. Government shuts down.

[kandrathe]

Mind you, I am not an economist so I had to find out what "labor share" meant exactly. However, this one does:

It shows that during recessions, the unemployment rate goes up and corporate profits tank. When the economy recovers, the unemployment rate drops, and corporate profits rise.

Corporate profits after tax will rise on that EXP(x) type curve as GDP rises.



Capital builds on capital. That is the notion of Capitalism. They build enterprise, which transforms raw materials, and labor into good and services that people buy. The profits are shared with investors, and reinvested in new enterprise.

What you should question, which is what I question is the percentage of GDP which is devoted to raising wages and creating new jobs.

Where we should be angry at the investors is that they've put their money into "get rich quick" vehicles (.coms, housing, etc.), which has resulted in investment bubbles, as well as stagnant job and wage growth for the past few decades. Along with them, we should be very angry with government for creating regulatory incentives which accelerate these mal-investments. For example, tax laws which allow you to write off mortgage interest. In 1997, the tax laws changed where you were allowed $500,000 for married couples, or $250,000 for singles exclusion of capital gains on the sale of a home, available once every two years. When stocks and bonds appeared risky, this made housing very attractive, and the only investment which escaped capital gains. These tax laws encouraged people to buy expensive, fully mortgaged homes, as well as invest in second homes and investment properties, as opposed to investing in stocks, bonds, or other assets. It also artificially drives up the demand, and price of homes, where there value is not so much their utility, but in their ability to avoid taxation. And, for wages, this did buoy up those house building industries and the demand for labor in a limited market.

For the average Joe, the effect was to make home ownership less accessible, and home remodeling very expensive.

Who are you more upset with? The person who blindly seeks the best return for their investment, or the government (and their special interest lobbyists) for crafting laws which create unfairness and chaos?