First, we must ask why - given the depressed state of the developed world - return on capital is rising at all and why it's so high? Latest figures from the Office for National Statistics show that the return for the UK's non-financial companies was 12.2 per cent in the second quarter of 2016. That's almost three percentage points better than at the trough of 2009. True, it's some way short of the 14.5 per cent recorded in 1997, but inflation was materially higher then, which is relevant.
The oddest thing is that return on capital should be high and rising while interest rates are at a record low and, in effect, can't go lower. And that's strange because falling interest rates should exert downward pressure on return on capital. That's partly because there is an interest-rate component within return on capital; that figure is, after all, really just a special sort of interest rate - a cost of money whose spending has been deferred for the long term as it's sunk into capital projects.
In addition, as the cost of capital falls, that should persuade more companies to do more capital spending because projects that would have been unprofitable when capital's cost was high suddenly become viable. That's consistent with corporate finance theory, which says that, in order to maximise its value, a company should embark on as many projects as it can where the net present value is positive (basically, where the return on investment exceeds the cost of investment). So, all over the land, companies should be doing lots of projects that produce lower - yet still profitable - returns, thus pulling down the overall return on capital. But that's not happening.
True, factors that are keeping interest rates so low may partly explain the wide gap between return on capital and cost of capital. So if uncertainty shrouds the world in a damp blanket, that will tilt investors towards risk-free government bonds, thus squeezing interest rates. On the other side of the equation, companies may ignore cheap money if their bosses reckon the depressed demographics of the developed world mean the requisite demand for their lovely new projects won't materialise.
Both these factors are discussed in our feature about interest rates. However, there is something else to focus on, which, in the words of Nobel Prize-winning economist Paul Krugman, is about "the quiet class war that America's oligarchy has been waging for decades".
Included in this oligarchy - and to a lesser extent the UK's - are the bosses, and even the employees, of the most successful companies. These companies have got themselves into a self-sustaining position where they can generate supernormal returns (extract 'economic rents', to use the jargon). The figures bear this out. Using a massive database run by management consultant McKinsey, Jason Furman, an adviser to President Obama, and Peter Orszag, an investment banker, produced an influential paper last year which showed that the return on equity (RoE) for companies in the S&P 500 index of US companies was much more skewed towards the high end in 2014 than in 1996. In addition, the best 10 per cent of all listed non-financial companies had raised their RoE from three times the average in 1965 to 10 times in 2014, at which point these companies were producing a mind-boggling 100 per cent RoE. Sure, such a figure should be treated with caution. Even so, after adding back goodwill into the equity denominator, their RoE was still about 30 per cent in 2014 and three times the average.
From these data, the two economists theorise that:
■ A rising share of companies are earning a supernormal return on capital.
■ Workers at these companies - as well as the bosses - share in these excess returns.
■ Fat returns - to labour as well as to capital - discourage workers from leaving their employer, thus reducing the labour mobility for which the US was once so famed.
What the economists don't say - although it is implied - is that these trends exacerbate the inequality of wealth in the US that create the vast swamps of depression where the likes of Mr Trump feed.
But these forces also present us investors with a dilemma. We want to have our capital invested in companies that can extract self-sustaining economic rents - the likes of Alphabet (US:GOOGL) in the US and Nestlé (SVX:NESN) in Switzerland. Yet as workers, consumers and citizens we are likely to be disadvantaged when elite companies and elite workers grab too much.
If you like, it's a dilemma that's ever present for us. We want to invest in markets that can be hijacked - because that's where the greedy returns lie. The rest of the time we want smoothly functioning markets where goods and services clear at the lowest possible price, where labour competes on an equal footing across industries and countries and where not a penny of capital earns an excess return.
The trouble is, we can't have it both ways. The likes of Mr Trump will be around a long time to remind us of that.
