In his seminal work "The Wealth of Nations", 18th century Scottish economist Adam Smith wrote:
the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.
Yet, here we are today with US profit margins at new highs approaching 12% of sales. What gives?
I think this is a big question -- existential even, because, as the Adam Smith quote suggests, it goes to the heart of what makes for a functioning and equitable society. I have two takes below. One interpretation is about inequity, and implicitly about corporatism masquerading as liberty. And the other is about network effects creat...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.