"History has shown that these conditions don't persist indefinitely" · Transcript · BuffettMungerGPT

WarrenCorporate profits in the United States are, except for just a very few years of record in terms of GDP. I've been amazed that after being in a range between 4% and 6% of GDP, they have jumped upward. And you would not think this would be sustainable over time. Corporate profits in the United States are, except for just a very few years of record in terms of GDP. I've been amazed that after being in a range between 4% of GDP, they have jumped upward. And you would not think this would be sustainable over time. Excuse me, just one second. Charlie, want to talk for a second? You've just heard him on the subject. But corporate profits, when they get up to 8% plus of GDP, that is very high. And so far, it has caused no reaction. One reaction could be higher corporate tax. taxes. You have lots and lots of businesses in this country, earning 20 or 25% on tangible equity in a world where long-term bond rates are four and three-quarters percent government bond rates. That's extraordinary. If you'd read an economics book 40 years ago, and it talked about that kind of a situation persisting, well, you wouldn't have found a book like that. I mean, that does not make sense under pure economic theory. But it's been occurring for some time. And as a matter of fact, it's gotten more extreme. Corporate profits continue to rise as a percentage of GDP. That means somebody else's share of GDP is going down. And you're quite correct that the labor component of GDP has actually fallen fairly significantly. Whether that becomes a political issue, maybe in the next campaign, whether it becomes something that's something that. does something about the Congress has the power to change that ratio very quickly. Corporate tax rates not that long ago were 52% and now they're 35% and a whole lot of companies get by with paying 20% or less. So I would say that at the moment, corporate America is kind of living in the best of all worlds. And history is shown that those conditions don't persist indefinitely.