One lesson from recent economic troubles has been the usefulness of
history. Just as the crisis was unfolding, the Harvard economists Carmen
Reinhart and Kenneth Rogoff — who unfortunately became famous for their
worst work — published a brilliant book with the sarcastic title “This
Time Is Different.” Their point, of course, was that there is a strong
family resemblance among crises. Indeed, historical parallels — not just
to the 1930s, but to Japan in the 1990s, Britain in the 1920s, and more
— have been vital guides to the present.
Yet economies do change over time, and sometimes in fundamental ways. So
what’s really different about America in the 21st century?
The most significant answer, I’d suggest, is the growing importance of
monopoly rents: profits that don’t represent returns on investment, but
instead reflect the value of market dominance. Sometimes that dominance
seems deserved, sometimes not; but, either way, the growing importance
of rents is producing a new disconnect between profits and production
and may be a factor prolonging the slump.
