One reaction to Roberts’ comments on Milanovic’s new book: Theoretically, profits tend to drop in competitive markets. However, in the real world, as the largest owners of capital exert power over government policy (inevitable), markets are likely to become less competitive and more dominated by monopolies that can raise prices and extract more rent. One example is the decades of lax anti-trust enforcement in the US – which may be shifting some. Higher monopoly prices and profits hurt low-income people the most – and push down their relative wealth. Other government policies – failure of the Medicare program to negotiate effectively with the medical industrial complex/Big Pharma for example – expand the flow of $$ from consumers and taxpayers to powerful business interests and bloat aggregations of capital. When splitting theoretical hairs, economists need to remember the “political” in “political economics.”
Meanwhile in the marketplace:
“Private equity has made one-fifth of the market effectively invisible to investors, the media, and regulators.”
The invisible hand?