Slides from 2016 PK Conference

1. Piketty’s Paradox, Capital
Spillage, and Inequality
Craig Medlen
13th International Post-Keynesian Conference
Sept 15-18, 2016

2. First Law:
𝛼 ≡ r x β
𝜋
𝑌
≡
𝜋
𝐾
X
𝐾
𝑌
Second Law:
𝐾
𝑌
≈
𝑠
𝑔

3. 0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Tobin's Q1
Non-Financial Corporations

4. 0
0.5
1
1.5
2
2.5
3
3.5
4
Stock Value/Income
Fixed Capital/Income

5. -0.2
-0.15
-0.1
-0.05
0
0.05
0.1
0.15
0.2
0.25
196819701972197419761978198019821984198619881990199219941996199820002002200420062008201020122014
Corp Invest Rate
Corp Y Rate

6. -4
-3
-2
-1
0
1
2
3
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Corp Invest Rate
Capacity Utilization
Normalized Data

7. (1) S – I = GovDef + Current Account
(2)[FREE CASH + (s- I) Non-Corp]= GovDef + Current
Account
(-)
FREE CASH = GovDef - (s-I)(Non-Corp) +
Current Account
[(𝜋 + 𝐷𝑒𝑝) – Icorp ]

8. -2
-1.5
-1
-0.5
0
0.5
1
1.5
1948
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
WideCash
Narrow Cash
Non-Corp s-I
s-I +GovDef
Gov Deficits plus Non-Corporate s-I
FREE CASH/Corp Invest

9. 0
200
400
600
800
1000
1200
1400
1600
1800
2000
Free Cash
Spillage
Free Cash and Spillage

10. 0
0.2
0.4
0.6
0.8
1
1.2
1.4
68
9
70
1
2
3
4
5
6
7
8
9
80
1
2
3
4
5
6
7
8
9
90
1
2
3
4
5
6
7
8
9
2000
1
2
3
4
5
6
7
8
9
2010
11
12
13
14
Corporate Spillage into the Capital Markets
Dividends
Mergers plus Dividends
ShareRepurchases plus Mergers plus Div
(Fraction of Fixed Investment)

11. First Law:
𝜋
𝑌
≡
𝜋
𝐾
*
𝐾
𝑌
𝜋
𝑌
≡
𝜋
𝑆𝑀𝑉
*
𝑆𝑀𝑉
𝑌
Or:
𝐶𝑎𝑠ℎ
𝑌
≡
𝐶𝑎𝑠ℎ
𝑆𝑀𝑉
*
𝑆𝑀𝑉
𝑌

12. 0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Cash/SMV
Moody's AAA Bond
Rate

13. 0.16
0.18
0.2
0.22
0.24
0.26
0.28
0.3
0
0.5
1
1.5
2
2.5
3
3.5
4
SMV/Y Cash/Y
SMV/Y Cash/Y