Who’s Making Money?

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So what explains the crankiness of American business given the very high corporate profits they’re raking in these days? Justin Fox crunches the BEA numbers and says the disconnect is simple: financial corporations are making loads of money but domestic nonfinancial corporations aren’t:

So the reason that corporate profits are near their all-time highs would appear to be that financial corporations (mainly big financial corporations) and multinationals are making lots of money and paying less of it out in taxes. Hmmmm.

The corporate profit picture would seem to mirror what’s been going on in the income distribution for individuals for the past few decades. The money is increasingly going to a select group at the very top of the economic food chain, who are able to reap the rewards of global growth, play the financial system astutely, and avoid taxes. You can spin this in a moderately positive way: these are very dynamic economic times, and the rewards are going to those companies and individuals who position themselves to take advantage of this dynamism. But there are an awful lot of negative ways you can spin it, too.

Something is odd here. Yesterday the Commerce Department emailed me a few charts about the economy, and one of them is over on the right. It’s strictly domestic profits (i.e., it doesn’t include overseas profits from multinationals), and although it doesn’t say so, I assume it shows pretax profits, so it’s not driven by differences in how companies play games with the tax code. And what it shows is a pretty similar trajectory for both financial and nonfinancial profits: they’re both up sharply, and they’re both just slightly below their 2006 peaks. There’s no breakdown in the chart between big and small nonfinancial companies, but there’s also no special reason to think the numbers are wildly different.

So….I’m not sure about this. Fox’s analysis appeals to me, but I’m not sure the data supports it. More later if I get hold of some more detailed figures.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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