Workers or rentiers

We explore the shifting allegiances in the traditional conflict between capital and labor. This shift is created by finance: the distinction between financial and nonfinancial firms has become elusive. Our focus is on the worker who voluntarily or involuntarily transforms into a rentier. We embed the choices of capital and labor in state-space representations of a general macro model: one state equation is the accumulation of wealth, the other is the accumulation of capital. The 'euthanasia of the rentier' and the pick of the capital accumulation regime is determined by government choice of the interest rate.