Arnold Kling

Profits in the New Economy

Arnold Kling, Great Questions of Economics
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I argue against the view that a more competitive economy is causing profits to fall.

In 1998, when many people were thinking that profits could continue to grow indefinitely at 15 percent per year, I was arguing for 6 percent. Now, when some people think that profits are never going to increase again, I am arguing for 6 percent.

Discussion Question. How can economists tell whether low profits are a short-term phenomenon or part of a long-term trend?

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