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‘Corporate price gouging’: sleight of hand for troubled economic waters ahead

By Graham Young - posted Wednesday, 21 February 2024


(Reserve Bank of Australia)

Labour flatlines from the start of the graph, while capital income increases, although the greatest decline is in gross mixed income, which is a close proxy for small businesses.

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However, all is not what it seems.

Capital income is not just corporate profits in the form of dividends but includes an amount for the rental income imputed to house owners. It also captures income from the mining sector.

Just excluding mining makes a huge difference as you can see in the graph below.

(Reserve Bank of Australia)

Or in this break-up of the contributions to capital income.

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(Reserve Bank of Australia)

So when you strip out mining and the housing boom, there has been little change between the shares of labour and capital, contradicting the claim that corporate profits have suddenly accelerated.

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This article was first published by Epoch Times.



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About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

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