It may seem like the ravings of a particularly intemperate Wall Street occupier to suggest that executive pay could be a reason for the weak economic recovery – surely it cannot have a big enough macro impact – but there’s enough economic evidence to start taking the idea seriously.

In a piece I did a few weeks ago about the rise in the profit share of GDP I noted this argument by Andrew Smithers:

The strange behaviour of profits after this recession needs further explanation and Mr Smithers has an innovative idea. “It seems to me that what we’ve seen has been a marked change in corporate behaviour,” he says. “They have not responded by cutting prices and competing like fury, they’ve responded by cutting staff.”

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