>On Behalf Of Doug Henwood
>
> Nathan Newman wrote:
>
> >How do you measure profit share of GDP for multinationals?
>
> That doesn't matter for a trend measured over several years.
Sure it does if an increasing share of profits is coming from overseas
exploitation. As you note, there has been a slight uptick in wages in the
US in the last few years, which could easily mean less profits from the wage
bill in the US but more from both exploitation and sales globally.
There is also the concern that multinationals increasingly play games with
different accounting systems globally to suppress profits by allocating
costs to the highest tax areas, while allocating profits to subsidiaries in
tax havens. Murdoch's NewsCorp has been most successful at this strategy,
allocating most of its profits to subsidiaries to whom it "sells" rights to
its films and other assets as bargain-basement prices, making profits appear
far less in the US than they really are.
> > 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.
I won't argue for rational expectations on the future, but the sky-high
prices for Internet stocks show plenty of investment based on expectations
of profit in the future. On what basis, given that, can you argue stock
prices are just based on short-term movements in profits?
> >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.
Actually, the expansion of tax shelters has exploded in just the last few
years (as opposed to dropping rates and expanded deductions), according to
recent reports. As NYT wrote last week, "With incomes rising, particularly
among the wealthy, Americans are paying a lot more in federal taxes than
they did before the economic expansion of the last decade. Not so, American
corporations. Their profits are growing even faster than Americans' incomes,
yet the taxes they pay have peaked and have begun to fall...taxes paid by
companies on profits reported to the IRS fell to 20 cents on the dollar in
1997, from 26 cents on the dollar in 1990."
Now, this may not effect profit measures reported to stockholders, rather
than the IRS, but it indicates the game-playing being done strategically.
It makes most measures on profits pretty suspect.
> >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.
Again, you seem to have a US-only approach on this. You are seriously
arguing that multinationals are not increasing exploitation globally. And a
small recent upswing in wages has accompanied (at least on paper) an even
larger upswing in productivity, so relative exploitation still seems to be
increasing even in the US.
Gosh, you make the economy sound peachy-keen. If things are so rosy, why
aren't you supporting the current political management:)
-- Nathan Newman
