“…there is now overwhelming evidence of an increase in market power in the United States. That means bigger corporate profits (far exceeding risk-adjusted returns), higher market concentration in sector after sector, and fewer new entrants. Americans like to think that they have the most dynamic economy the world has ever seen, one that is now on the cusp of a new innovative era. But the data refute such claims.
“Consider the standard measure of innovation: total factor productivity, which refers to the growth in output beyond that which can be explained by an increase in inputs like labor and capital. In the 15 years prior to the COVID-19 pandemic, the overall growth of TFP in the US economy was only one-third of what it had been in the preceding 15 years. So much for entering an innovation age! Making matters worse, rising market power is also a key factor contributing to increased inequality, as I argued in my book People, Power, and Profits.”