Back to this interview. IMO the only question that JG missed a beat on a little was in response to that regarding growing inequality...
JG focused on the impact of rising valuations (ie. multiple expansion) delivering a wealth effect / capital appreciation to exiting holders (older people) with the automatic consequence of diminishing future returns for new holders (younger people). I'd have also liked him to have mentioned the secular decline in the labour (wage) share of national income that's occurred since the 1970s:
https://fred.stlouisfed.org/series/W270RE1A156NBEA...labour's loss being capital's gain, of course, as shareholders have captured an ever larger slice of the profit pie. This is a very big deal IMO.
I strongly suspect that this issue lies behind many issues and much of the dissatisfaction and strife we see within developed nations (western societies) today, causing people to be drawn to ever more radical notions and ideologies, when what might well have prevented much or all of this frustration would simply have been widespread (materially) higher - and rising - real incomes.
There are perhaps numerous reasons for this decline in the labour share of income, including globalisation and technology; whatever the drivers I suspect that if it continues then at some point we could eventually see our societies truly fracture in a modern day peasants' revolt that likely won't be much good for anyone, rich or poor...
Being an optimist, I'm hopeful though that this decline in the labour share of income can be stemmed and begun to be reversed in the coming years.
Now, higher and rising wages would reduce profit margins and thus profits, all other things being equal. However, optimistically I'd hope that higher wages would in turn drive higher consumption and thus greater business revenues, such that profitability could increase despite the margin compression. ie. Capital would receive a smaller proportion but of an enlarged pie.
Furthermore, this might prove beneficial to delivering some sustained modest inflation, stemming the disinflationary forces that have brought us to beyond-ZIRP, together with all the issues flowing from that. Sustained modest inflation would be key to diminishing (in real terms) the large quantities of govt debt that's been accumulated, not least in response to Covid, without us feeling the need to risking embracing even more radical but potentially dangerous policies.
An investment theme that's understandably gained popularity over recent times is the secular
middle class-ification of emerging/developing economy populations, fuelling strongly growing consumption of all sorts of goods and services in those nations for decades to come...
Contrast this outlook to that in developed (western) nations, where our middle classes - unless unusually skilled within a high value niche - have begun to find themselves as just the latest in line facing the prospect of stagnant or declining real wages: first it was the labourers and unskilled, then the skilled, then the professionals. The young, even if reasonably successful in their career, perhaps face a future worse off in real terms than their parents were. Not a great situation, breeding dissatisfaction, resentment, strife, and instability.
Something as superficially unradical as rising real wages and a larger share of national income going to labour is thus my prescription: a more cohesive society, more stable public finances and more sustainable long term equity growth. Perhaps it can or will happen of its own accord, or perhaps politicians need to give it a nudge or three. Hopefully, any nudges will be reasonably well calibrated, and the bumps not too great.