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Comment by spangry | Hacker News Reader

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.

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My original take on the statement was that corporate revenue wasn't going to either wages or capital investment. The other options are

1. The corporation's treasury, which is not economically useful past a certain point, or

2. Shareholders. In this case, since I don't see much evidence of major dividends, that would mean stock buy backs, which are not a great way of paying shareholders.

Returning money to shareholders is a great idea, if there is nothing better the corporation can do with it. If.

The paper is not making much sense to me, though.

Haven't read the full paper but is seems to suggest that returns on capital investments are declining because of consolidations. Companies in dominant positions make huge profits(compared to the rest of the players), while those that are not in dominant positions make far less profit - but on average the returns on investment are on the decline. Furthermore the huge profits deincentivise risk taking for the dominants, hence they invest less. But not being an economist, I may be way off.

Owners of brands. A company with a large market share and a strong brand can force its suppliers (including, for example, owners of the shops they rent), who are the ones making the investments in capital to accept tiny margins, and productivity increases mean that they can force their personnel to accept lower wages.

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