Latest news with #AdrianWooldridge
Time of India
3 days ago
- Business
- Time of India
Is the Trump 2.0 agenda deliberately aimed at companies' bottom line?
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Corporate America's profits are slipping. Last week, the Bureau of Economic Analysis confirmed that corporate post-tax profits dropped in the first quarter by 3.3% — by far their biggest fall since the companies make less money, it's often a harbinger of an economic slowdown. In this case, it also raises the more profound question of whether the Trump 2.0 agenda is deliberately aimed at companies' bottom sounds outlandish. The S&P 500 just hit an all-time high, so Corporate USA is worth more than ever. But it makes sense. After-tax profits account for an unprecedented 10.7% of gross domestic product, when in the last 50 years of the 20th century, they never exceeded 8%. The only time approaching their current share of the economy was in 1929 on the eve of the Great Crash. If the nation is to deal with inequality, money must be redistributed from somewhere; corporate profits are an obvious source of in the Trump coalition have long held an anti-corporate agenda. A few months ago, Adrian Wooldridge argued in this space that MAGA wanted to 'end capitalism as we know it.' Specifically, he contended that many leaders in the Trump coalition wanted to 'deconstruct the great workhorse of American capitalism: the publicly owned and professionally managed corporation.'These are strong words, but sound understated compared to the writings of Kevin Roberts, head of the Heritage Foundation and a lead creator of Project 2025, an ambitious and radical agenda for Trump 2.0. He argues that BlackRock, the world's largest fund manager and a pillar of contemporary US capitalism, is 'decadent and rootless' and should be burned to the ground — a fate it should share with the Boy Scouts of America and the Chinese Communist Marjorie Taylor Greene, an outspoken Trump supporter in Congress, 'the way corporations have conducted themselves, I've always called it corporate communism.' She has urged government investigations of companies that stopped donations to Republicans after the Jan. 6, 2021, attack on Bannon, Trump's campaign chief in 2016, complained to Semafor that only $500 billion of the US government's $4.5 trillion came from corporate taxes. 'Since 2008, $200 billion has gone into stock repurchases. If that had gone into plants and equipment, think what that would have done for the country.'He advocated a 'dramatic increase' in taxes on corporations and the wealthy. 'For getting our guys' taxes cut, we've got to cut spending, which they're gonna resist. Where does the tax revenue come from? Corporations and the wealthy.'Several current policies are not explicitly anti-corporate, but more or less guaranteed to have that Lerner, head of the HOLT analytical service at UBS , points out that in data going back to 1870, the correlation between tariffs and companies' earnings yield (a measure of their core profitability) has been consistent. Tariffs hurt companies. Looking at the cash flow return on investment since 1950, it has risen (meaning companies grew more profitable) directly in line with rises in imports as a proportion of done jointly by Societe Generale Cross-Asset and Bernstein demonstrates that globalization has benefited US companies not only through international sales (40% of revenues for S&P 500 companies) but also through lower costs. In 2001, when China joined the World Trade Organization , the S&P's cost of goods sold accounted for 70% of the revenues generated by selling them. It had been around this level for many years. That has now dropped to 63% — a massive improvement of 7 percentage points in this basic margin. Technology, consumer and industrial firms have gained the most — and stand to lose the most from 2.0 policies so far have redistributed from shareholders to workers. Vincent Deluard, macro strategist at StoneX Financial, points out that the only tax not cut by the One Big Beautiful Bill currently before Congress is corporate income tax. 'The grand bargain of the Big Beautiful Bill is to compensate for the tariffs' inflationary shock with personal income tax cuts,' he says. 'If exchange-rate adjustments, foreigners, and consumers do not pay for tariffs, corporate profits will.'Beyond that, eliminating illegal immigration and restricting foreign students raises labor costs. Threats to tax foreign investments in section 899 of the bill — which now appear likely to be withdrawn — risked reducing capital inflows and make it harder to raise own behavior has contributed to these trends. Over history, their share of GDP has tended to oscillate with the economy, rising when labor organizations' negotiating power is weak. But in this century, their profits grew less susceptible to the economic cycle, surging higher after the Edwards, a macro strategist for SocGen, argues that they pushed through margin-expanding price increases 'under the cover of two key events, namely 1) supply constraints in the aftermath of the Covid pandemic, and 2) commodity cost-push pressures after Russia's invasion of Ukraine.'Margins matter more in an environment where people are conscious of the damage inflation can do to their standard of living. That gave rise to the concept of 'greedflation' — which Edwards thinks is deserved. Politicians have increasingly felt emboldened to intervene in companies' pricing decisions, something that's been off-limits since Richard Nixon's ill-fated price controls in the early 1970s. Kamala Harris proposed 'anti-gouging' policies in her unsuccessful presidential campaign; more recently, Trump forced a climbdown by companies like Amazon that proposed to itemize the impact of tariffs on the prices they to the top of a company never used to be a ladder to mega-wealth. That was reserved for entrepreneurs who founded their own firms. Modern executive pay has changed that and allowed CEOs to become billionaires by meeting unchallenging targets for their share price. The gulf between their pay and workers' wages shrieks of injustice; according to the Economic Policy Institute, the CEO-to-worker compensation ratio reached 399-1 in 2021; in 1965, it was only 20-1. From 2019 to 2021, CEO pay rose 30.3% while those workers who kept their jobs through the pandemic got a raise of 3.9%.This can easily be dismissed as the politics of envy, but executive compensation now arguably skews the entire economy. Andrew Smithers, a veteran London-based fund manager and economist, and nobody's idea of a leftist, has long inveighed against the bonus culture, which he holds responsible for a disastrous misallocation of argued that America's problem was 'two decades of underinvestment':The major cause has been a change in the way company managements are paid. The 1990s saw the arrival of the bonus culture, which massively shifted management incentives and thus changed management behavior. Sadly, the change did immense damage to the economy. Managements were encouraged to invest less and, with lower investment, growth argues that companies increased their investment in response to corporate tax cuts in earlier generations, but stopped doing this once executives were paid to prioritize their share price. That led them to cut back on investment, spending money on acquisitions and share buybacks. That dampened growth, but also ensured better returns in the short run for investing in stocks is still primarily a game for those who are already wealthy, this stoked inequality still further. Opposition to high executive pay is often couched as a populist class-warrior position, but there is far more to it than Trump coalition always had anti-corporate elements, but this didn't stop his first administration from delivering for the private sector in a big way. In 2024, Trump added the support of Silicon Valley, and took the oath of office for the second time in front of a serried rank of billionaires. But he's also losing old corporate Koch, the industrialist hated by Democrats as the architect of libertarian Republican policies, has lost patience. After funding Nikki Haley's run against Trump in last year's Republican primaries, he told the Cato Institute earlier this year that too many institutions had lost their libertarian principles, and 'people have forgotten that when principles are lost, so are freedoms.' How will people like Koch respond if the administration clamps down on companies?America's key political developments tend to happen within parties, not between them. The current Republican coalition is no stranger in concept than Lyndon Johnson's Democratic Party of the 1960s, the New Deal coalition that combined multi-racial liberals from the North and West with pro-segregationist whites from the South. Once Johnson decided to choose one wing over the other, with his civil rights acts, that alliance now, the MAGA coalition includes both America's largest corporations and their most trenchant critics. The policy choices of the next few months, and their effects, will determine whether that can continue.
Bloomberg
06-06-2025
- Politics
- Bloomberg
The Wrong Kind of Muscular Leadership
Poland's new president Karol Nawrocki is the latest political leader obsessed with muscle. But it will inevitably make Poland weaker, says Bloomberg Opinion's Adrian Wooldridge. (Source: Bloomberg)
Gulf Today
02-05-2025
- Politics
- Gulf Today
The arc of history does not simply bend toward justice
Adrian Wooldridge, Tribune News Service Ronald Reagan was wrong. The nine most terrifying words in the English language are not 'I'm from the government, and I'm here to help.' They are: 'The arc of the moral universe bends towards justice.' This is a pretty phrase that was invented by a good person, Theodore Parker, and revived by another good one, Martin Luther King Jr. But it's terrifying because it produces unjustified confidence that history is on your side, and this has consequences. Donald Trump might well not be in the White House if progressives hadn't been so convinced that the moral universe was bending in their direction. The phrase presumes that history has a pre-determined direction. But Karl Popper demonstrated that such historical determinism is based on a fallacy: The direction of history is clearly shaped by inventions (the internet or AI), and we cannot predict what these will be. Every day brings yet more evidence that the liberal vision of history is wrong. In the 1990s, liberals predicted that, thanks to the 'moral arc,' democratic capitalism would triumph globally. Great sociologists such as Max Weber and Emile Durkheim predicted that modernity would bring bureaucratisation and secularisation in its wake. But the first defining act of the 21st century was the destruction of the World Trade Center by 19 religious fanatics hijacking airplanes. Today, democracy is in retreat, strongmen are on the rise, and Trump is dismantling the rules-based global order. These leaders are recreating patrimonial regimes in which the governments are more like royal courts and the state is treated as family property. This is much more Vladimir Putin's world than the political scientist Francis Fukuyama's benevolent 'end of history.' Economic productivity has certainly improved since the mid-18th century (though more sluggishly in recent decades), but the idea that this produces moral or aesthetic progress is nonsense. Hitler took power in Europe's best educated and most culturally sophisticated country. The reality is, progress in one area often brings regress in another. The illusion of history begetting justice is terrifying for two reasons. The first is it encourages a false sense of confidence that is often counterproductive. The Democrats' confidence that history was on their side led them to underestimate Trump so badly that they stuck with Joe Biden even though it was obvious that his powers were fading. This confidence also led the party to endorse a collection of unpopular causes, which might be conveniently lumped together as 'wokery,' on the grounds that they were the contemporary equivalent of the civil rights movement. To hell with the people who question these causes even if they happen to be the numerical majority. Before that, the same confidence persuaded the US establishment, Republican as much as Democrat, to embrace China with open arms, subcontracting much of America's manufacturing to the People's Republic, even though the Leninists who ran the regime were determined to replace the US as the world's leading military and industrial power. The second reason it's terrifying is it encourages people to subcontract their moral judgments to history. Most progressives did not treat the problem of transgender people's rights as a nuanced moral issue that involved the careful balancing of the rights of biological women against trans women or an even more careful consideration of the potential harms of powerful drugs or invasive surgery. They simply rushed to be on 'the right side of history.' The notion of the moral arc encourages groupthink and all the blindness and bullying that comes with it. It is far healthier to treat history as an open-ended process that is made by individuals who have to wrestle with their own moral judgments rather than go with the supposedly progressive flow. 'History is all things to all men,' as Herbert Butterfield put it in his great critique of the idea of history as progress, The Whig Interpretation of History. 'She is in the service of good causes and bad.' Progress is something that is made rather than predetermined — and thinking that you are on the winner's side too early often puts you at a disadvantage.
Bloomberg
10-03-2025
- Politics
- Bloomberg
Is Anti-Americanism On The Rise?
The Trump administration is boosting a powerful force in global affairs: anti-Americanism. Bloomberg Opinion columnist Adrian Wooldridge explains why. (Source: Bloomberg)
