One reason for the rise in US socialism

Should we be surprised by the rise of socialism in the US? No, if you look at the numbers. This is important because changes in the regulatory or tax environment will affect the return on capital, which will, in turn, impact the valuations of all companies. In an already overvalued world, a change in the government regime can be a catalyst for a downturn.

The evidence is in the changing percentages of profit to GDP and of employment compensation relative to GDP. Historically, employment compensation was always higher than profits, but that shifted in the post-2008 period. What happened? The cost of capital fell as rates approached zero. This allowed profits to increase as capital costs fell. Coupled with a change in industry structure, with the most profitable companies in the tech sector and not as heavily concentrated in labor-sensitive companies, the dynamics of profits to employee compensation flipped. There was no diabolical plot driven by greed, except to say that monetary policy assumed a trickle-down effect from lower rates that may not have worked as expected. Now we will have to live with the consequences.