The rise of firms with monopoly power and their ability to generate profits without the usual sorts of investments may also explain why the S&P 500 has experienced better profit growth than revenue growth over long periods (notably, after 2008). It’s not that these firms are growing so much as they are making easy profits, cutting costs, and buying back stock with the proceeds (which boosts earnings per share without increasing the intrinsic value of the business).23 Market power permits these easier options instead of the harder work of innovation.
