United States, the data show that American firms’ profitability
is roughly 40 percent higher at home than abroad.
These high corporate profits also appear to be more persistent
today than in the past. With a return on capital in excess of 15
percent indicating “abnormal” profits, the data show that a U.S.
firm with abnormal profits in 2003 had an 83 percent chance of
still displaying such high profits in 2013. In the 1990s, the same
firm would have had only a 50 percent chance of maintaining
its high profitability.
Which sectors are earning these high profits? Roughly one-
quarter is being earned in a wide selection of industries, while a
second quarter comes from the healthcare and pharmaceutical
industries (in which patents provide considerable market power
to firms developing new products). The remaining one-half of
abnormal corporate profits is being earned in the technology
sector, from firms such as Amazon, Apple, Facebook, Google,
and Microsoft. These technology giants are now the five most
valuable publicly traded firms in the world; their collective profit
in the first quarter of 2017 exceeded U.S. $25 billion.