that range for reasons we will discuss in the next chapter. The key point for now is that unlike the profit margin, the “total-return to capital” measure has been relatively stable or stationary over the postwar period up until 2010. The equity share of output has diminished as the interest-rate share increased with leverage. For bond holders, more leverage and interest expense means more risk for any given level of profit margins. As a result, spreads have been higher on average since 1965.
