Tuesday, August 15, 2017

Tuesday Morning Links

This and that for your Tuesday reading.

- Asher Schechter examines new studies showing how massive markups are enriching corporations at the expense of workers:
The two standard explanations for why labor’s share of output has fallen by 10 percent over the past 30 years are globalization (American workers are losing out to their counterparts in places like China and India) and automation (American workers are losing out to robots). Last year, however, a highly-cited Stigler Center paper by Simcha Barkai offered another explanation: an increase in markups. The capital share of GDP, which includes what companies spend on equipment like robots, is also declining, he found. What has gone up, significantly, is the profit share, with profits rising more than sixfold: from 2.2 percent of GDP in 1984 to 15.7 percent in 2014. This, Barkai argued, is the result of higher markups, with the trend being more pronounced in industries that experienced large increases in concentration. 

A new paper by Jan De Loecker (of KU Leuven and Princeton University) and Jan Eeckhout (of the Barcelona Graduate School of Economics UPF and University College London) echoes these results, arguing that the decline of both the labor and capital shares, as well as the decline in low-skilled wages and other economic trends, have been aided by a significant increase in markups and market power.
De Loecker and Eeckhout find that between 1950 and 1980, markups were more or less stable at around 20 percent above marginal cost, and even slightly decreased from 1960 onward. Since 1980, however, markups have increased significantly: on average, firms charged 67 percent over marginal cost in 2014, compared with 18 percent in 1980.
Markup increases, De Loecker and Eeckhout find, became more pronounced following the 2000 and 2008 recessions. Curiously, they find that economy-wide it is mainly smaller firms that have the higher markups, which according to De Loecker is indicative of widely different characteristics between various industries. Within narrowly defined industries, however, the standard prediction holds: firms with larger market shares have higher markups as well. “Most of the action happens within industries, where we see the big guys getting bigger and their markups increase,” De Loecker explains. 
- Hadrian Mertins-Kirkwood and Stuart Trew rightly question the Libs' attempt to paint platitudes and corporate giveaways as a progressive trade agenda as they sit down to renegotiate NAFTA. And David Climenhaga notes that John Horgan may be nothing but pleased with threats from Alberta Conservatives to remove British Columbia from the corporate-driven New West Partnership.

- Muhammad Hamid Zaman comments on the importance of reliable and complete data to shape public policy choices in the health sector (and elsewhere).

- Meanwhile, Andrew Seaman reports on new research suggesting that poverty can manifest itself in arterial buildup even in young children. And Jordan Press discusses the link between foster care and youth homelessness.

- Katie Hyslop highlights the importance of preparing children to bring a critical eye to manipulative media. But Tom Pride notes that the UK Cons have other ideas - instead encouraging parents to teach children not to share (and to value their property over all else) to avoid even the slightest hint of social responsibility.

- Finally, Denise Balkissoon rightly points out the problem with a white supremacist and anti-social movement built around the preservation of undeserved privilege.

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