[lbo-talk] Bernanke

Eubulides paraconsistent at comcast.net
Sat Sep 15 14:05:21 PDT 2007


Doug Henwood wrote:
> On Sep 15, 2007, at 2:30 PM, Eubulides wrote:
>
>
>> Foreign investment in
>> 2003 was $130 billion compared to $115 billion here at home. So we
>> don't
>> have a huge amount of excess capacity and, if we were to cut the
>> current
>> account deficit by only 25 percent, our capacity utilization rate
>> would
>> increase from 79 to 86 percent. If we cut the deficit in half, the
>> utilization rate would go to 93 percent." David Hale:
>>
>> <http://www.levy.org/default.asp?
>> view=publications_view&pubID=10654b0b370>
>>
>
> Bernanke's point is that we need investment to increase capacity. The
> Fed doesn't like cap'y util much above 82%.
>
> Doug
>
>
====================

Right, but it's hard to see how markups would remain constant or improve if competition increases as a result of capacity expansion; and if a flurry of sectoral innovations emerges in the capacity expansion process that precipitate changes in capital/labor ratios that would further lower the wage share, no? By the latter I mean, to take one example, what would happen if GM became as efficient from an engineering/shop floor pov as Toyota given the already existing overcapacity in autos?

Ian



More information about the lbo-talk mailing list