Not Net Interest

Following up on the idea that working with "net interest" is bad economics, I figure today it should be safe to look at some gross interest numbers.

Interest Income compared to Corporate Profit:

Graph #1: Interest Runs Much Higher Than Profit From the 1970s to Maybe Eight Years Ago

Comparing them as a ratio, Interest relative to Corporate Profit:

Graph #2: Interest Relative to Corporate Profit

Interest and Profit run about equal (at 1 on the vertical scale) for most of the 1960s. For most of the 1970s interest was mostly on the high side of one and a half times the size of profit. Interest jumped to about 4 times corporate profit for most of the 1980s, then gradually worked its way down to near where it was in the 1960s.

Finally, compare employee compensation to the sum of interest and corporate profit:

Graph #3: Compensation of Employees relative to (Interest + Corporate Profit)

Labor income ran at around 2.8 times capital income in the 1960s. Labor income declined (relative to capital income) all through the 1970s, when rising wages were said to be the driving force behind inflation. I don't see it.

In the 1980s and '90s labor income generally stayed in the neighborhood of 1.6 times capital income.

There was a sudden jump around the time of the 2001 recession. Then labor income fell until it was not much more than equal to capital income. But then, the good news: Since 2007, labor income has only increased, relative to capital income. And what good times these past ten years have been!

Hm. How did I miss that?