Curious what your thoughts are on the role corporate consolidation/concentration role in these themes you laid out so well here.
Anti-trust policy seems like a latent driverunderlying all of this - the levels of concentration in the 1910-1930s is similar today as well as a lot of the pre-FDR politics (e.g., Andrew Mellon spending a decade as Treasury sec while still running his business empire).
Consolidated corporate power is implicit in your pro-capital description but it also helps define the wage and globalization trends in another way. Do you think it is possible that the reason inflationary periods have been more "equal" in terms of income is that they coincide with a stronger anti-trust policy and therefore a flatter pay distribution relative the levels of concentration like we've seen over the last 30-40yrs with a much wider dispersion in income levels?
Yes - increased industry concentration has definitely been a "pro-capital" trend. IF you have not done so already - read Lina Khan's "Amazon's Antitrust Paradox". Now she is head of the FTC - I keep a close eye on what they are doing. Most recently they launched a case stopping franchisors from banning poaching by franchisees. Another area of interest in rail companies - where we have seen consolidation rising profits and stagnant wages.
Again China leads the way here, by breaking up is tech cartel. I am trying to get ahead of the game by working out which areas will be hit by regulators before it happens...
Jonathan Kanter at the DOJ is another one to key an eye on in addition to Khan.
Matt Stoller has done excellent work covering this space and his book "Goliath" may be of interest to you if you have not read it.
I understand you're looking more at what China is doing with its tech companies but it also seems to me that China has been a major beneficiary of the US corporate concentration/power (more likely to outsource and expand ops in China than smaller businesses). If cracks start to emerge in US corporate power, I wonder how, if at all, that would influence what China does with its own cartels.
Taxation structures have also massive benefited big corporations at the expense of small business as well. In China, they have tended to use government subsidies to benefit business, which are relatively easy to cut.
Kanter and Khan's actions along with Rohit Chopra at the Consumer Financial Protection Bureau definitely underscore the capital/labor regime shift you've highlighted elsewhere. There are still a lot of entrenched interests and ideologies putting up resistance and it will be an ongoing non-linear grind but you can very much see the underlying shift starting to gain traction. Would definitely suggest checking out Matt Stoller's work covering this space if you or any of your subscribers want to dig deeper into the US side - he is all over this.
Great write-up, Russell. Only question I have with higher bond yields longer term - how is it sustainable? As the saying goes, compound interest is the most powerful force in the universe and at 100+% of GDP and high deficit spending (I completely agree austerity is a losing proposition politically) it will compound to the next hundred per cent very quickly
Almost certainly they are going to have to keep yields below inflation. This is why I suggest long GLD/TLT, because the moment TLT yields are capped, I see GLD performing extremely well
Russell, thanks - great write up.
Curious what your thoughts are on the role corporate consolidation/concentration role in these themes you laid out so well here.
Anti-trust policy seems like a latent driverunderlying all of this - the levels of concentration in the 1910-1930s is similar today as well as a lot of the pre-FDR politics (e.g., Andrew Mellon spending a decade as Treasury sec while still running his business empire).
Consolidated corporate power is implicit in your pro-capital description but it also helps define the wage and globalization trends in another way. Do you think it is possible that the reason inflationary periods have been more "equal" in terms of income is that they coincide with a stronger anti-trust policy and therefore a flatter pay distribution relative the levels of concentration like we've seen over the last 30-40yrs with a much wider dispersion in income levels?
Would love to get your perspective. Thanks again
Yes - increased industry concentration has definitely been a "pro-capital" trend. IF you have not done so already - read Lina Khan's "Amazon's Antitrust Paradox". Now she is head of the FTC - I keep a close eye on what they are doing. Most recently they launched a case stopping franchisors from banning poaching by franchisees. Another area of interest in rail companies - where we have seen consolidation rising profits and stagnant wages.
Again China leads the way here, by breaking up is tech cartel. I am trying to get ahead of the game by working out which areas will be hit by regulators before it happens...
Jonathan Kanter at the DOJ is another one to key an eye on in addition to Khan.
Matt Stoller has done excellent work covering this space and his book "Goliath" may be of interest to you if you have not read it.
I understand you're looking more at what China is doing with its tech companies but it also seems to me that China has been a major beneficiary of the US corporate concentration/power (more likely to outsource and expand ops in China than smaller businesses). If cracks start to emerge in US corporate power, I wonder how, if at all, that would influence what China does with its own cartels.
Thanks for the heads up. Will do re Jon Kanter.
Taxation structures have also massive benefited big corporations at the expense of small business as well. In China, they have tended to use government subsidies to benefit business, which are relatively easy to cut.
Jon Kanter has had some success trying to reduce anti-poaching contracts that are now common in the US
Kanter and Khan's actions along with Rohit Chopra at the Consumer Financial Protection Bureau definitely underscore the capital/labor regime shift you've highlighted elsewhere. There are still a lot of entrenched interests and ideologies putting up resistance and it will be an ongoing non-linear grind but you can very much see the underlying shift starting to gain traction. Would definitely suggest checking out Matt Stoller's work covering this space if you or any of your subscribers want to dig deeper into the US side - he is all over this.
Thanks
When do we see capital controls returning in a G7 country?
I fear that macro trades that make sense (ie: short Gilts, long Swiss Franc or gold) may not work out due to this risk
Case in point: Russia in Feb 2022 that wasn't fatal but hurt EM managers
Great write-up, Russell. Only question I have with higher bond yields longer term - how is it sustainable? As the saying goes, compound interest is the most powerful force in the universe and at 100+% of GDP and high deficit spending (I completely agree austerity is a losing proposition politically) it will compound to the next hundred per cent very quickly
Almost certainly they are going to have to keep yields below inflation. This is why I suggest long GLD/TLT, because the moment TLT yields are capped, I see GLD performing extremely well