[PEN-L:4865] Re: Asset tax

[dhenwood@xxxxxxxxx (Doug Henwood)]

At 12:48 PM 4/28/95, Paul Cockshott wrote:

>I think that you ascribe too much power to the movement of
>capital. Rates of return on capital differ between states and
>between industries. The movement of capital probably does constrain
>these divergences but it does not elimate them.

There's a paper in The Deal Decade, edited by Margaret Blair (Brookings,
1994), that looks at rates of return for a broad sample of US firms from
the late 1970s through the late 1980s/early 1990s. Despite the deregulation
of the markets and a furious pace of transactions, which should
theoretically have narrowed the dispersion of profit rates, this didn't
happen. Profit rates were as dispersed as ever at the end of the deal
decade as at the beginning.

It also shows that Jensen was right - that firms have lots of spare cash
flow. What to do about that hasn't yet been solved.

Doug

--

Doug Henwood
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