Another Econ Analysis

Capital Wins, Labor Loses, But Andrew Smithers Says It Can't Go On | The Business Desk with Paul Solman | PBS NewsHour | PBS

...ANDREW SMITHERS: The standard assumption of most Keynesian and monetary economists is that the current imbalance in the economy which results in the large cash flow surplus of the corporate sector is cyclical and will change when entrepreneurs recover their animal spirits, either naturally or because there is so much money around. The data suggest otherwise. They point to the current imbalance being structural, not cyclical, and needing a structural change in management remuneration contracts for it to change.

As the problem is unlikely to be solved quickly it poses two risks to the economy. The first is that premature fiscal tightening will push the economy back into recession. The second is that too much delay will cause people to expect inflation to rise and this will probably cause actual inflation to pick up.

Unfortunately this matter is seldom if ever discussed and I hope your efforts will help to change this. I cannot see much hope of changing policy to address this complex problem unless it is first widely discussed.