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Corporate profits last quarter were around 10% of GDP, which is roughly the same as in 2006.
Anyway, corporations ultimately distribution profits to individuals either directly (dividends, share buybacks) or indirectly (investment). It's silly to think that corporate profits are somehow "evil", they are a key part of a successful economy.
Also, unlike quarterly profits of a business inflation is calculated relative to the same month in the previous year, so that adds up to a year of lag instead of only a quarter of lag for quarterly profits.
So the range of quarterly profits between approximately Q2 2021 and Q2 2022 would be the best time range to compare with the June 2022 inflation. Lo and behold, peak inflation coincides with the highest quarterly profits ever recorded. [Edit: Well, not highest "ever recorded" but rather highest recorded in the 70 years of data from the chart you provided.]
That doesn't prove causation but it is completely consistent with GP's contention.
The common narrative seems to be our modern capital and corporate system encourages risky investment through the promise of upside return (and limited downside liability) for those who take the risk, then encourages competition that will eventually erode away that profitability for the ultimate end benefit of lower cost and higher quality for consumers.
However I’m not convinced that’s working as intended in the recent era where capital returns seem to be made as much by financial manipulation, “optimisation” of costs/quality, and market capture/lock-in as they do innovation. Meanwhile we have prisoner dilemmas of competition in which the big players innovate just enough to build a moat from disruptive competitors and enable customers to rationalise away planned obsolescence while keeping a stable peace of two or three major players to maintain the pretence of the free market and maximise return without overcompeting or facing regulatory backlash.
It feels like we still pretend the customer is king and the children of the enlightenment are in charge - narratives that once served us, now being used to protect a new and quite different system they’ve given birth to - while the evidence tends to suggest increasing ossification and rent-seeking as reflected by corporate strategy being lure, capture, then turn up the dials.
I’d agree we probably don’t get the iPhone and MacBook Air without the investment incentive so I’m not opposed to free market fundamentals. But when I read, for example, that the average US household generates $2700 annually in revenue for banks after risk costs, I do wonder whether a different model could achieve the same outcomes and maybe leave $300bn in the economy for consumers to allocate elsewhere. Then again maybe it’d just end up in the pockets of whichever other utilities have the most leverage over consumer budgets.
How does the government know the exact amount to produce?
The myth that a planned economy is inefficient comes from a time when not everything was computerized.
There’s probably some point where running a full command economy becomes feasible with modeling, oppressive surveillance and repression, etc. Not sure I’d want to live in it, but “the Soviets failed” is a weak argument.
Clearly humanity will get there, or will likely destroy itself in the process.
What we have under "capitalism" is essentially the Soviet wet dream: being able to force workers into work, "willingly", and they work so hard they piss into bottles to stay on target.
We've got all the repression right now, just for a slice of the population that everyone considers effectively disposable.
Woah.
Every year that goes by without a reset in industrial policy, the web gets worse and there are fewer companies doing actual hardware. It turns out when you let the people who focus solely on finance and efficiency run things, it goes well for a while and then your foundational companies become like Boeing.
Government should participate more strongly, not less - including by breaking up big tech.
Can't let farmers empty water tables, let prices of eggs go insane, or corporations up prices just to take advantage of customers to the point it causes a price spiral.
The Fed is ill-equipped, the FTC doesn't do much, and the CFPB was neutered.
Ah yes, a bloated bureaucracy has always been the recipe for a flourishing economy. The US is still probably the most solid, wealthy and - compared to its peers - fast growing economy in the world. The lack of administrative meddling is what made the US the dream destination for all the most ambitious people around the world. A radical shift to jeopardize that is a terrible idea.
I'm not from the US, but I'm glad different systems with different strengths exist. Even if only so we can compare how differences in e.g. amount of regulation etc affect a country overall.
I could just eat fewer things made out of eggs
There are people who don't eat eggs at all!
If I choose to eat a steak with some veggies on the side, where's the egg in that? Where are the beans?
Yesterday I had a pizza. It had no egg or beans on it, just bacon, cheese, pizza crust, tomato, etc.
I'm curious how corporate profits could be regulated? Its unclear to me how we could distinguish increased profits from increased value creation vs increased profits from increased corporate greed
It's easy to essentially collude without directly contacting your competitors if there are only 3 companies in a particular industry. You raise prices, and the other two raise in sync, because consumers have no other place to go.
there'd be no grounds for which this could be reasonable. Usurping private assets is not a thing, and should never be a thing that is allowed in a democratic society with rule of law, except in circumstances such as national defence, or some other emergency. High inflation (which, compared to the 1970s' isn't actually that high) is not such an emergency situation where this form of usurping of private assets would be justifiable.
I know the US system is a little different with long-term fixed mortgages, but for much of the world on variable interest rates, central bank decisions have an almost next day impact on income (and a fairly near term impact for those able to lock-in rates for a couple years).
It’s not quite as active as the government seizing assets, and I agree from a liberty perspective in governments not doing that, but from a purely rational perspective if I was presented the option of “once off wealth tax to erode the savings everyone accumulated during Covid (or even better put them into a long-term bond that will be released during a future deflationary period)” and the situation we have right now where they’re netting the same outcome slowly, in the process enabling privileged parties along the way to benefit through siphoning off as the policy levers squeeze, I’m given some pause.
in the UK: an interest rate change has an immediate effect on demand for new mortgages but a lag of several years on existing borrowers as nearly everyone fixes their mortgage for 2-5 years
(basically by buying an interest rate swap)
In AU some fix all or part for 2-5 years (typically 3 years or less, with discouraging rates for the longer term relative to current rates at the time to factor for risk) but it’s not universal. For example, as of mid 2022 only 5% of loans were taken as fixed.
As a result most who did fix recently did so during Covid low rates for 3 years and are coming off now facing hikes from maybe 1.89-2% if they got the best fixed rates (at a time when the cash rate was 0.1% and variable was around 1%) to around 6% variable and 7.8% if they want to fix again.
Despite this idea being popular, it is not true in the sleightest. From Land being taken over for infrastructure proyects like highways, to peoples priavte property being taken by the police doing arrests, the idea that usurping pirvate assests should never happen only extends to corporations.
Having Amazon as a store front, and a manufacturer that can steal products and sell and promote them under amazon basics brand is one of the most overt cases for regulation to cut their company up into tiny little pieces. And yet the same goverment that will steal your farm to make a highway now thinks that taking up shareholder value is an afront agianst democracy itself
There will always be "record" profits in nominal terms, assuming that a company's revenue grows in line with steady inflation.