It's The Economy Stupid - Part Deux

Author

Joe is Wypoxic
February 10, 2026

Timely articles in the WSJ backing up my post from yesterday.

The Big Money in Today’s Economy Is Going to Capital, Not Labor

Soaring profits and stocks funnel more of GDP toward companies, their top employees and shareholders. AI will intensify this trend.

…The divergence between capital and labor helps explain the disconnect between a buoyant economy and pessimistic households. It will also play an outsize role in where the economy goes from here.

The brute financial force of all that wealth means market fluctuations, like last week’s, matter more for consumer spending. Meanwhile, artificial intelligence could funnel even more of economic output toward capital instead of labor. Last week may be a taste. Amid reports that layoffs are climbing and job openings plunging, especially for professionals exposed to AI, the Dow Jones Industrial Average closed above 50000 for the first time.

It began with factories

Gross domestic product measures all the value added in the economy. For example, the value added by a manufacturer is its sales minus inputs such as parts and raw materials. That value is then distributed either to labor as wages and benefits, or to capital as profits and interest. Some value added is also allocated to depreciation, the cost of replacing assets as they wear out or become obsolete. 

The shift to capital from labor has actually been under way for more than 40 years. Labor received 58% of the total proceeds of economic output, as measured by gross domestic income (conceptually similar to GDP), in 1980. By the third quarter of last year that had plummeted to 51.4%. Profits’ share, meanwhile, rose from 7% to 11.7%.

In the 1980s and 1990s, the demise of unions and the spread of outsourcing sapped workers’ bargaining power. The nature of capital also changed: Businesses spent less on long-lived buildings and factories and more on computer equipment, software and intellectual property that must be replaced every few years.

And then there is automation. Its impact showed up first in manufacturing as machines, robots and computers took the place of workers. In 1980, 66% of value added in factories went to labor as wages and benefits, said Pascual Restrepo, a Yale University economist. By the 2000s, that was down to 45%.

The unspoken gist of this article is that companies are making higher profits with less workers, which leaves companies with a choice on how to allocate the extra dollars they don’t spend due to a reduced labor force. In our current economy, they’ve made their choice: hoard corporate profits while enriching shareholders and management instead of raising wages/benefits for the remaining workers.

This article is also in the WSJ:

This Is Why It’s So Hard to Find a Job Right Now

A ‘deep freeze’ has enveloped the U.S. labor market. A whole bunch of factors are at play.

The pace of hiring in America has dropped precipitously, and there isn’t a single reason why.

Instead, there are a lot of them. 

Uncertainty over tariff policy has made it difficult for many companies to plan ahead, leading them to hold off on hiring. For some—particularly small businesses—tariffs have raised costs, making it more difficult to take on new employees.

High short-term interest rates are another pressure, particularly for smaller firms, which often rely on credit card borrowing to meet financing needs. Tech companies that hired heavily in the wake of the pandemic are still dealing with an overhang of workers.

Another factor: Workers aren’t leaving the jobs they have. The number of jobs people quit in December came to 3.2 million, the Labor Department reported Thursday, well below the 4.5 million hit in March 2022, when postpandemic hiring was in full swing. The quits rate, which measures quits as a share of employment, was 2%, well short of the 2.3% it averaged in 2019, before the pandemic.

All this matters because the bulk of hiring in any given month is replacing people who have left. 

With Trump and gang attempting an authoritarian takeover of the United States, it’s easy to lose sight of what most directly impacts most voters: the economy. this means how much people make, how much tings cost, how easy/hard it is to get and keep a job, etc.

The key is that the modern American economy is simply not working for most people. Recognizing this, showing understanding and empathy, and working hard (and letting everyone know what we are doing) to redirect some of the money flowing to capital (i.e., corporations, shareholders and management) towards worker wages and benefits would go a long way to bringing voters back to Democrats.

Having run for federal office more than once and talking one-on-one with thousands of voters in a deep red state, I found that coupling an economic message with a message to reduce gross inequality and corporate profit gouging is an effective message.

One last important point. I’ve mentioned the book “More Everything Forever” by Adam Becker (@adambecker.bsky.social) in two previous posts: The Techno-Insanity Scam and Tech Billionaires Will Be the End of Us. I just finished the book and will likely refer to it more in the future. In his closing chapter, Becker provides only one concrete policy prescription to start pushing back on the idea that some type of benevolent Artificial General Intelligence technology will rule our future if we just listen to the current crop of techno-billionaires: ELIMINATE BILLIONAIRES. He writes, “Over eighty years ago, Louis Brandeis [a member of SCOTUS from 1916-1939] warned that ‘we may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both’. The past decade has provided ample proof that Brandeis was right: concentrated wealth has eroded democracy in the United States and around the world.”

PS - last minute morning addendum. They are running the economy into the ground and they know it:

Peter Navarro: "The jobs report comes out tomorrow. We have to revise our expectations down significantly for what a monthly job number should look like ... Wall Street has to adjust for the fact that we're deporting millions of illegals out of the job market."

— Aaron Rupar (@atrupar.com)2026-02-10T14:19:41.455Z

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