When Inequality Goes Corporate

One of the oft-cited reasons for the populist fervor that swept Donald Trump into the White House and now threatens to push Europe into a kind of neo-nationalist hell complete with institutionalized xenophobia and massive sovereign defaults (in the event of redenominations), is creeping inequality.

The “downtrodden masses” aren’t properly represented and they need a voice. Or so the story goes (never mind the absurdity of that “voice” emanating from a braggadocious billionaire who quite literally constructs golden monuments to himself).

This inequality shows up in charts like these, from Goldman:

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(Goldman)

Well as it turns out, inequality and the plight of the “little guy” doesn’t just apply to people. As SocGen writes in a new piece out Monday, “increasingly the concept of inequality is starting to be applied within the corporate world.”

Here’s are some short excerpts and two charts for you to consider.

Via SocGen

The topic of wealth inequality is being increasingly applied to the corporate world. The largest companies are seen as being so powerful and profitable that they suppress competition, depress wages and generally make the process of wealth distribution uneven. There appears to be a case. While margins at the average US company have been under pressure, the most successful US stocks have sustained their profitability and been afforded ever higher valuations in the process. Numerous studies seek to show US industry concentration to be intensifying around a few key firms. Critics also highlight the lack of new firm creation and point to record low levels of IPO activity in recent years as indicators of stifled entrepreneurship.

socgen1

Smaller company performance has been challenging and an equal-weighted universe of S&P 500 stocks has systematically outperformed average US companies from 2003 onward, indicating that the smaller companies were struggling versus the biggest stocks long before quantitative easing, the financial crisis and the rotation from active to passive. In recent years this performance gap has widened. Worryingly those small caps appear to be also embracing leverage in an attempt to narrow the gap

socgen2

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2 thoughts on “When Inequality Goes Corporate

  1. How perceptive of SG. A little late to the party don’t you think? WTF. Fifteen years is about right for corporate cover-up everything to keep the “status quo” hidden in plain sight. Always remember WHO BENEFITS from SQ? “Everything is good, don’t worry”, get another job along with the two you already have. Pick yourself up by those bootstraps that keep getting shorter and shorter. This theft will end only when we make it end, get involved in your own community run for something yourself or support progressive people who care what happens next, not what happened yesterday.

  2. Our commander and Chiefs inner circle is made up of x Goldman sacks, x Exxon , and through in one extreme right wing libitarian what could possibly go wrong?

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