Nathan Newman wrote:
>How do you measure profit share of GDP for multinationals?
That doesn't matter for a trend measured over several years.
> Is this profit
>as share of global GDP? The issue is not merely profits as share of
>revenues, but expected profits over time.
Who knows what the future holds? Stock prices have historically
responded mainly to short-term movements in profits and interest
rates. They talk a lot about discounting the future, but spec- I mean
investors are reacting mainly to the present and recent past.
> Many companies - the Internet
>companies being the most insane examples - are drilling potential profits
>into expansion and expanded market share, but as long as workers are not
>getting an increased share compared to productivity increases, shareholders
>know that deferred dividends today translates into profits tomorrow.
Real wages in the U.S. are up over the last 3-4 years.
>Most companies are doing everything possible to avoid reported profits --
>note the news recently about largescale corporate tax shelters
That hasn't changed dramatically over the last 10 or 20 years at least.
> -- but even
>without the scams, it is hardly surprising that in the scramble of expansion
>and merger, immediate profits are low compared to share prices.
Why should that be? Mergers are being paid for not out of cash flow,
but with stock. "Expansion" isn't that dramatic either; investment
levels aren't all that high.
>But if share values reflects what I think are reasonable expectations of
>profits in the future
Reasonable? Why would you ever think expectations are reasonable?
>Rising productivity and falling wages
Wages in the U.S. are not falling, anywhere in the distribution.
>And on that basis, rising share prices should be seen as a barometer of
>exploitation not speculation.
That was true from roughly 1982 to, oh, 1995. After 1995, it's mainly froth.
Doug
