Brad DeLong described the “pig” economist as someone who dives into the details of the economy and wallows around in it until he gets some insight about what is happening. Meanwhile, Nick Rowe is wondering whether we are moving closer or father from being an “apple” economy. This post is a pig’s response.
A big week in Silicon Valley.
Google buys Motorola Mobility for $12 Billion, HP shut down its WebOS hardware operation (shortly after purchasing Palm) and looks to sell off its entire PC hardware division (after purchasing Compaq), while at the same time purchasing Autonomy for the (insane) price of $10 Billion. Autonomy sells structured data search services — its clients are large firms. Autonomy is in the high margin monopolistic “space”, whereas PCs are in the commodity space.
The cited reason for HP wanting to divest itself of its (profitable) consumer hardware division is falling margins.
Let’s measure short run returns from holding equities.
The market failures have been in the capital markets, not the labor market. The only thing wrong with wages is that we have allowed them to stagnate for so long.
At this rate, we would need to deliver 10% of GDP as corporate dividends before unemployment falls back to 5%.