Jul 19, 2017 - Economy & Business
Report: Monopolies invest less in the economy
Corporate America has become ever more concentrated over the past two decades, and its monopoly power is killing the incentive for large companies to invest in the economy, according to new research from NYU's Stern School of Business.
- The paper's authors assert a cause-and-effect relationship between a widespread increase in large company monopolies and a decrease in investment in new technologies, plants, and equipment by those same monopoly companies.
- Economists have been confounded by a dearth of corporate investment in the economy for years, since high profits and low interest rates should encourage more investment. But if companies feel they are protected from competition by their sheer size, they needn't continue to invest to maintain high profits.
- Why this is bad for U.S. workers: Weak corporate investment holds back GDP growth and stunts wage growth. When corporations invest in new technologies, they tend to raise productivity, enabling workers to demand higher pay.