fatvegan

I was doing some "study" for macroeconomics, and I started thinking about the proportion of GDP going to workers. As you do. Apparently it has gone down in the last few decades, which I suspect is the reason the average P/E ratio on the ASX has stayed fairly constant even as liquidity has gone crazy. Productivity hasn't gone up much, because GDP hasn't grown that much, so you'd have expected profits per dollar of sharemarket money would have gone down. We're throwing money at all these super funds demanding a happy return, but most of that money isn't actually being invested in productive activities. It's just inflating share prices. Except that we don't notice the inflation because profits have gone up too. Normally they go up when business gets better at doing stuff (making a bigger pie). But sometimes profits just go up because companies get a larger share of GDP (which is just stealing someone else's slice of pie).

So anyway, I was sitting here, thinking to myself. And I read some stuff by Frank Stilwell and got to remembering some things. On the left, there seems to be this funny attachment to socialism, even when capitalism has managed to make everyone happy. There is the fear that capitalism will sneak into our lives and subvert all our heroic dreams for revolution by giving us everything we want. For instance, Menzies started helping workers buy their own homes, as a "bulwark against bolshevism". What a devilish plan! It worked. Now Australia has a high rate of home ownership, and nobody wants a revolution.

I have my doubts that the rich will ever let economic equality truly happen, but if they're willing to, then I'm not sure what the problem is. I suspect the rich would gas the poor, before they choose to share their merry mansions, but maybe I'm underestimating them. If you win the class war by making everyone bourgeois, then that seems rather good. My only problem with the bourgeois is that some people aren't. My only problem with capitalism is that it doesn't do what it says, and roots an awful lot of people economists reckon it's supposed to benefit.