Who’s Making Money?

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.

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.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend

Latest