Say Goodbye to the Stock Market’s Secret Sauce

A multidecade rise in profit margins may already be in the process of reversing, taking the wind out of the stock market’s sails for years to come

By Justin Lahart

Say Goodbye to the Stock Market’s Secret Sauce
Illustration: Mikel Jaso


It isn’t how much you make but how much you keep.

Most investors grasp that concept when it comes to their own finances, but they also need to consider how it applies to the companies they own. A long-term tailwind to stocks from expanding profit margins is at risk of flipping into reverse.

Steady increases in margins have been the stock market’s secret sauce since the 1980s, allowing earnings to grow at a much faster clip than sales and pushing share prices higher as a result. If profit margins were merely to return to their levels of 20 years ago, then earnings—and share prices—might be 40% lower than they are today.



For the first time in over two years, corporate profit margins are falling. In a shifting economic and political environment, this may be only the beginning of a long slide. The S&P 500’s forecast first-quarter profit margin—or earnings as a share of sales—is 10.7%, according to FactSet. While down nearly a percentage point from a year earlier, that would, with the exception of 2018, still count as a record high.

The decadeslong increase in profit margins was the result of many things going right at once, including a steady decline in labor costs, increases in global trade, lower taxes and gains in market share. Unfortunately for companies, each one of these trends seems at risk to at least partially reverse itself in the years ahead.



Start with labor costs. One way to consider these is to look at the income earned by U.S. workers as a share of gross domestic income—a sum of all wages, profits and taxes the economy. This has been falling for decades, dropping to about 53% in the first three quarters of last year from about 58% in 1980 according to the Commerce Department. Among the reasons for this downtrend: a diminution of employees’ bargaining power as union membership declined and an expansion of global trade that allowed companies to shift production to countries where labor costs are cheaper—particularly China.

Next, taxes. Last year’s tax cut was just the most recent in a series of actions that have dramatically lowered companies’ tax bill. Taxes came to about 11% of before-tax U.S. corporate profits in the first three quarters of last year, according to the Commerce Department. In 2000, the tax share was about 32%. Additionally, U.S. multinationals appear to have steadily shifted more of their domestic profits to tax havens such as the Cayman Islands since the 1990s, effectively reducing their tax rates by even more than the Commerce Department data show.

Big companies, like those in the S&P 500, also have gained market share. This hasn’t only given them a larger share of the profit pie, but it’s also allowed them to reduce costs through greater scale. It also has reduced competition for labor, some economists argue, adding to big companies’ power to set wages. As of 2016—the most recent year with available data—about 47% of U.S. workers were employed at firms with 1,000 or more employees. That compared with about 42% in 1996.

But all of these trends—the reduction in labor’s share of the economy, the decline in corporate taxes and big companies’ amassing of increased market share—seem unlikely to persist.

Worries about inequality are on the rise and, with Democrats vying for their party’s 2020 presidential nomination viewing it as a hot-button issue, proposals to combat it through higher taxes and other redistributive policies are gathering momentum. Meanwhile, the U.S. trade fight with China and the fact that Chinese wages have steadily risen may give U.S. multinationals second thoughts about shifting more production abroad.

Criticism of large companies’ power has risen, too. As part of his beef with Amazon.com Chief Executive Jeff Bezos, President Donald Trump has argued that the giant internet retailer’s business practices are unfair. Massachusetts senator and presidential hopeful Elizabeth Warren earlier this month proposed breaking up Google, Amazon.com and Facebook .

At the very least, this is an environment in which companies will struggle to squeeze out much more from these favorable trends. It seems unlikely workers’ income share will continue to decline. Corporate taxes probably aren’t heading even lower. The forces of globalization that helped bolster earnings are on the wane. Profits will come under pressure if companies can’t enjoy the marginal benefits of these trends.

Climbing margins have given investors a sweet ride. The downhill portion could be bumpy and highly unpleasant.


Magical thinking crosses party lines in America

The left may prefer white magic to Donald Trump’s black, but everyone is dabbling

Edward Luce


Elizabeth Warren has vowed to scrap the electoral college. Alas, amending the US constitution is a pipe dream © AP


When Barack Obama launched his White House bid 12 years ago, he already had a library of well-crafted policies. Some were bold. Others were small-bore. Behind each position was a bench of experts. The same went for John McCain, Hillary Clinton, John Edwards, Mitt Romney and other 2008 contenders. Now we could be living in a different century. With the exception of Elizabeth Warren, whose campaign has yet to catch fire, today’s Democratic aspirants are content with a brassy slogan. Policy wonks might as well join the Mississippi gopher frog on the endangered species list.

The shift has little to do with ideology. Moderate Democrats, such as Beto O’Rourke, are as allergic to detail as are their rivals on the left. What marks the field out is comfort with post-literate politics. Who can blame them? Donald Trump has altered what it means to run for high office. No White House contender ever came near his blend of fantasy and falsehood. He won all the same. He may well do so again. The least bad thing you could say about Mr Trump’s fabulism is that he paid no price for it. But the truth is uglier: it may well have brought him victory.

Little wonder the habit is spreading. It was only a few months ago that Mr Trump dropped his magical claim that Mexico would pay for the border wall. There is little sign that voters who believed Mr Trump in 2016 hold him to account for failing to shake down America’s southern neighbour. Quite the reverse. They blame Democrats for keeping the US taxpayer off the hook. Good intentions are a weak differentiator. The left may prefer white magic to Mr Trump’s black. But everyone is dabbling.

Even the scholarly Ms Warren is not immune. Her latest vow is to scrap the electoral college. If America were to begin anew, few people would devise such a byzantine system. Rather than pander to the small populations of Iowa and New Hampshire, candidates would pitch to the whole nation. Unlike in 2016 and 2000, the verdict would always reflect the popular vote.

Alas, amending the US constitution is a pipe dream. Ratification requires two-thirds of each chamber of Congress and three-quarters of US states. There is no reason to think the smaller states would agree to their demotion.

So why does Ms Warren talk this way? The grander the promise, the likelier it is to go viral. In 2008, Facebook, Twitter and YouTube were not yet large enough to dominate the agenda. Most Americans still got their news from television. Today, social media is the news. The starker your claim, the stronger the feedback loop. Facebook’s algorithm rewards magical thinking. The Democratic variety comes in two forms. The first is the Oprah Winfrey school of positive thinking. The second is from Merlin’s bag of financial wizardry. Some of their magic overlaps. Both Bernie Sanders (Merlin), the socialist in the race, and Mr O’Rourke (Oprah), who is centrist, want to talk about reparations for slavery.

Common sense would ask why America should only now compensate descendants of a system abolished more than 150 years ago. Would reparations only be for blacks who descended from slaves? How would descendants of more recent Irish and Italian immigrants feel about their ancestral culpability? What about Asian-Americans? Even to pose such questions underlines their explosiveness. But airy talk is as far as it is likely to go. Any nominee who beat Mr Trump and took the White House would quickly drop the idea. Reparations are as likely to heal America’s wounds as Mr Trump.

On other questions, the schools of magic diverge. Oprah Democrats talk of America’s better angels. Should Joe Biden enter the race, he would join Mr O’Rourke, Cory Booker and Amy Klobuchar on that side. US politics has a soft spot for Kumbaya. But in today’s context, lofty sweet talk is misleading. Should he lose, Mr Trump will not retire quietly. The Merlin camp is less forgiving. Its magic is in the numbers. Mr Sanders comes close to promising money for nothing. Free college, healthcare and stronger social insurance are important goals. But there are not enough rich people to pay for them. Imitating Denmark would have to extend to its middle class tax rates.

Which leaves Ms Warren. My bet is that she would win a ballot of policy analysts. But they have always been thin on the ground. During his doomed 1956 White House bid, Adlai Stevenson, the professorial Democrat, is said to have been reassured that all thinking Americans were behind him. Yes, he replied, but I need a majority.


China’s New GDP Data Shows the Economy’s Biggest Vulnerability Is Growing

Property investment is accelerating in China, which will boost economic growth but restrain the country’s long-term potential

By Mike Bird




Chinese economic growth is holding up surprisingly well, driven by a bump in retail sales and industrial output. But Beijing’s recent stimulus is filtering into real estate, damaging the country’s long-term prospects.

First-quarter economic data show property investment again playing a major role as a driver of growth. It rose by 11.8% in the first three months of the year, the largest year-over-year gain in more than four years, easily outstripping the 6.4% increase in gross domestic product.




Residential buildings in Chongqing, China. Property investment helped buoy China’s economic growth in the first quarter. Photo: Qilai Shen/Bloomberg News


The rise in investment wasn’t as rapid as in earlier years, when growth of 20% or more was common, but the sector has grown far larger, so the expansion comes from a higher base.
Property has become an albatross around the neck of economic policy makers. Beijing is understandably uneasy about clamping down: housing is the main savings vehicle for the Chinese middle class and is vital to the health of the economy, so prices cannot be allowed to decline.

But pouring an ever-greater share of resources into the sector will drag on China’s long-term potential. Last September, research by International Monetary Fund economist Yu Shi pointed to the extent of the problem. Encouraged by the property boom, productive manufacturing firms increasingly shifted resources to the profitable real-estate sector, shaving 0.5 percentage point off productivity growth a year.
Even investors without a particular interest in the country would be wise to keep an eye on what’s happening in Chinese property: as the world’s largest trading economy, what happens in China rarely stays at home for long.


Xi and Trump Miss Their Chance

A successful US-Japan agreement on structural reforms three decades ago could potentially serve as a useful model for the current China-US trade negotiations. But Chinese President Xi Jinping appears to care only about maintaining political control, while US President Donald Trump seems to care only about himself.

Jeffrey Frankel

trump xi jinping

CAMBRIDGE – President Donald Trump has postponed until at least April the supposed deadline for concluding the United States’ current trade negotiations with China. A good outcome for both sides would be reached if China agreed to protect property rights better and reduce the state’s role in its economy; the US agreed to strengthen national saving and public investment; and both sides agreed to reverse their recent tariff increases. Unfortunately, this is not the deal that is likely to materialize.

For starters, Trump fixates on the bilateral US merchandise trade deficit. The Chinese could probably deliver on the verifiable – but worthless – step of committing to buy more US soybeans, natural gas, and other commodities. But this would have little or no effect on the overall US trade balance, because the US would export less soybeans and natural gas to other countries. Congressional Democrats would rightly point out that the gain was illusory, again highlighting the irrelevance of bilateral trade balances. The more meaningful measure – the overall US trade deficit – widened last year, the predictable result of Trump’s budget-busting fiscal policy.

The US and other countries have more legitimate complaints against China regarding technology transfer and intellectual property rights. The effective way to pursue these grievances would have been in cooperation with allies, via multilateral institutions such as the World Trade Organization or the Trans-Pacific Partnership. But Trump has gone out of his way to take the opposite approach, making progress difficult.

It is not easy to detect a coherent rationale for US trade policy under Trump. If one exists, it most probably involves pushing China to restructure its economy by providing a greater role for the market, shrinking the state sector, and lessening pervasive government control.

Certainly, this has been the overall approach of previous US administrations.

Generally speaking, pro-market reforms would tend to be in China’s interest, too – as many Chinese economists also recognize. A good example is government subsidies for steel mills and other heavy industry, particularly in the form of cheap loans from state banks. This was one component of China’s fiscal expansion in response to the global recession a decade ago. The subsidies left China with tremendous excess steel capacity – bad for economic efficiency and foreign competitors.

Although the Communist Party of China endorsed a pro-market shift in late 2013, little or no progress has been made since. On the contrary, it has become clear that President Xi Jinping is not interested in reducing the size or role of the state. Inefficient state-owned enterprises continue to enjoy easier access to bank loans than more dynamic private firms. Nicholas Lardy of the Peterson Institute for International Economics points out that Xi has rolled back market reforms. This may reflect Xi’s failure to appreciate the potential economic advantages of free markets, or his belief that maintaining political control over Chinese society is worth the economic cost.

The US has also long used free-market rhetoric in criticizing the renminbi’s exchange rate. Since 2003, US politicians have complained that the Chinese authorities intervene in the foreign-exchange market to keep the renminbi unfairly undervalued. Although the US objective was to help its companies compete against lower-cost Chinese producers, it pursued this under the guise of pressing for a market-determined exchange rate.

For ten years, this position made sense. But in 2014, market forces changed direction. Since then, the People’s Bank of China’s has had to spend almost $1 trillion to stem the depreciation of its currency. Had the PBOC let the market work, as US politicians demanded, the renminbi would have fallen even further.

Trump, as candidate and as president, has attacked China for manipulating the exchange rate. A strong renminbi is apparently still a key US demand in the current negotiations. The Chinese authorities, for their part, have no desire to let their currency fall freely. But all now recognize that the goal of stabilizing the renminbi’s exchange rate is no longer consistent with US rhetoric about reducing government influence and letting the market work.

The structural-reform component of the current US-China negotiations recalls similar talks with Japan three decades ago, which were prompted by congressional anger at the large US trade deficit with that country. In June 1990, under the Structural Impediments Initiative (SII), the Japanese government agreed to a detailed set of policy reforms requested by President George H.W. Bush’s administration.

The SII aimed to correct the bilateral trade deficit with more fundamental and effective measures than tariffs. Japan, for example, agreed to tighten enforcement of its competition laws, loosen ties among its keiretsu (industrial groupings), make it easier for large retail chains to open stores, and reduce the bias toward using land for rice farming. The US, meanwhile, agreed to domestic reforms intended to increase its household saving rate, reduce the tax bias toward debt-financed home ownership, and strengthen investment in education and training.

These reforms were designed to reduce the countries’ trade imbalances, especially by narrowing the gap in their national saving rates. But a noteworthy feature of SII was that both the US and Japan requested measures that would make the other’s economy more efficient.

As it happened, the “Japan threat” began to melt away soon after the SII, but not because of US or Japanese trade policy. Instead, Japan’s three-year financial bubble burst in 1990, and its economy has never quite recovered since.

Still, SII was a success, because it led to some modest steps toward mutually beneficial reforms and avoided destructive tariffs and quotas. In theory, it could serve as a useful model for the current China-US negotiations, if they were in similarly competent hands.

Unfortunately, the two countries’ leaders may not have such a firm grasp on economic principles. Xi appears to care only about maintaining political control, while Trump seems to care only about himself.


Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He is a research associate at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.


The Emergence of Homo Sapiens

'Those Who Obeyed the Rules Were Favored by Evolution'

Interview Conducted By Johann Grolle

Eastern chimpanzee

British anthropologist Richard Wrangham believes our humanity began with the murder of a tyrant. In an interview with DER SPIEGEL, he explains why homo sapiens are so murderous, while also being among the most peaceful species.

DER SPIEGEL: Professor Wrangham, you're interested in aggression. Why did you go to the Ugandan jungle to research it for it?

Wrangham: The jungle is full of aggression. One of my favorite things is to go for a walk in the forest, close my eyes and just listen. I hear the trills of birds, the chirping of insects, the calls of monkeys, sometimes even the sound of an elephant. And what is it that is so soothing and pleasant for us? Most of it is produced by males shouting out their maleness, their dominance. In other words, it is the language of aggression.

DER SPIEGEL: In your studies of chimpanzees, did you always focus on aggression?

Wrangham: No. First, I studied how these animals feed - -- which is a completely different subject. But when you follow a chimpanzee from dawn till dusk, the importance of aggression just hits you in your face. Compared to us humans, the rate of their aggression is enormously higher.

DER SPIEGEL: Can you give an example?

Wrangham: Take the behavior of males on the threshold of adulthood: They almost ritually attack one female after the other until each one shows signs of submission. Only when a male has achieved physical dominance over every single female is he able to enter the male hierarchy and compete there for the highest possible rank.

DER SPIEGEL: And does this brutality enable them to succeed?

Wrangham: Absolutely. Once a male is fully adult, he continues to attack females even when they give submissive signals to him. The male who beats a particular female the most is the most likely to be the father of her next offspring.

DER SPIEGEL: How do you feel when you watch something like this?

Wrangham: It upsets me. I do love chimpanzees, and I am fascinated by them. I appreciate the wonderful moments I experience with them. But they also have nasty sides. Watching a male beating up a female is horrendous - -- just as it is horrendous watching these animals tearing the guts out of a monkey that is still alive. The essential violence of chimpanzees' carnivory is thoroughly off-putting. It is why I haven't eaten meat for 40 years.

DER SPIEGEL: Is it fair for a scientist to describe this behavior as "nasty"?? Is aggression evil?

Wrangham: It would seem inhuman not to recognize that some of the chimpanzees' behaviors are deeply unpleasant. And is aggression evil? Yes, I think so, at least when it involves physical violence that is inflicting pain. Violence is the opposite of virtue. I think that a major object of human endeavor and societal ambition should be to reduce violence.

DER SPIEGEL: In this sense, at least, we humans seem to have taken a step away from chimpanzees.

Wrangham: Yes. If you trapped 300 chimpanzees who did not know each other in a plane for eight hours, many of them probably wouldn't leave it alive. People, on the other hand, barely touch each other on a long-haul flight. The level of violence has been monitored in a group of hunters and gatherers in Australia. These Aborigines suffer from strong social upheavals, alcohol abuse is high. Still, even under these conditions, the frequency of violence among these people is 500 to 1,000 times lower than among chimpanzees.

DER SPIEGEL: Though people are also capable of torturing each other, and our history is replete with war and genocide. Given this, how can you speak of the placidity of human nature?

Wrangham: You're right, it seems paradoxical. But it is important to understand that there are two different types of aggressiveness. Violence in war is mostly planned, deliberate and cold-blooded. The everyday aggression of chimpanzees, on the other hand, is spontaneous, short-tempered and born directly from the moment. Here we have one of the great mysteries of human nature: Why do we treat each other so peacefully in everyday life when we are capable of such a degree of deliberate cruelty?

DER SPIEGEL: Is this deliberate, planneding form of aggression a peculiarity of humans?

Wrangham: Not at all. You find it among chimpanzees as well. Konrad Lorenz believed that animals do not kill each other. But he was proven wrong. I was part of Jane Goodall's team, who first observed how chimpanzees attacked members of neighboring groups to kill them deliberately. The discovery of warlike patterns of aggression among chimpanzees was one of the big surprises of our research.

DER SPIEGEL: In other words, we have inherited the brutal part of our nature from our ancestors, whereas the peaceful part distinguishes us from them?

Wrangham: Yes, that's one way of putting it.

DER SPIEGEL: You write that humans owe their placidity to their own domestication. What do you mean by that?

Wrangham: We humans exhibit a number of biological characteristics that are more typical of pets than of wild animals, including a very low rate of face-to-face aggression. The reason that I attribute our peaceableness to our having been domesticated is because we share with our pets and farm animals some of these other characteristics, which we now call a domestication syndrome. Charles Darwin was already fascinated by this phenomenon. He studied domestic animals, and he noticed that they share a multitude of peculiarities not found in wild animals.

DER SPIEGEL: Like what?

Wrangham: Many pets have white spots in their fur. They often have floppy ears, a short face or a curved tail. All these traits are rare among wild animals, but common among pets. And the interesting thing is that humans didn't select their pets specifically for these traits.

DER SPIEGEL: How do you know? Maybe Stone Age farmers were fond of pigs with floppy ears or cows with spots.

Wrangham: We know it thanks to the ingenious experiments of the Russian geneticist Dmitri Belyaev. He bred silver foxes with only one trait in mind: he He selected the most tame and peaceful individuals from each generation. And behold, many of the other typical characteristics of pets emerged on their own.

DER SPIEGEL: Cuddly foxes sound cute. Have you seen them yourself?

Wrangham: No, unfortunately I haven't. But my student Brian Hare went to Novosibirsk, where Belyaev's team continues to work. He wondered why dogs understand human signals better than wolves. He assumed that it might be a result of targeted selection by humans. But then he examined Belyaev's foxes and found that they also know how to interpret human signals. So the ability to understand human signals seems to be another trait, like white patches of fur, that emerges as a side effect of selection for less aggression.

DER SPIEGEL: You claim humans are also domesticated. What makes you think that? We don't have white spots, or floppy ears, or a curly tail.

Wrangham: You're right. We have no tail, so it can't bend. But if you look at our skeleton, you will find a lot of peculiarities that are characteristic of pets. Four of them stand out compared to our ancestors: a shorter face; smaller teeth; reduced sex differences, with males becoming more female-like; and, finally, a smaller brain. This latest development is particularly fascinating. In fact, the evolution of humans is naturally characterized by a continuous increase in brain size. But it turns out this trend has reversed in the last 30,000 years.

DER SPIEGEL: How could a package of traits like that develop when it was not under any selection pressure?

Wrangham: We are still not sure what biological mechanisms produce the domestication syndrome. But we have circumstantial evidence. It is noticeable, for example, that many of the domestication traits are typical for young animals ...

DER SPIEGEL: ... in other words, dogs resemble wolf pups, just as we resemble Neanderthals who never reached adulthood?

Wrangham: Yes. Young animals are usually characterized by a lower level of reactive aggression. One way nature might evolve reduced aggressiveness is by allowing creatures to reach adulthood while still being emotionally juvenile. All the other juvenile traits are then nothing but side effects of the reduction of aggression.

DER SPIEGEL: You said earlier that our brain began shrinking 30,000 years ago. Is this when humans started getting tamed?

Wrangham: No. We can follow the process of domestication pretty thoroughly in the fossil record. According to that, the development started about 300,000 years ago. Brain size only began to decrease at the very end.

DER SPIEGEL: Obviously, we domesticated dogs, horses and cats, but who domesticated us?

Wrangham: The word "domestication" is somewhat misleading. It implies a relationship with humans. But Belyaev's fox experiments show us that only the selection of non-aggressive behavior is important. Whether this selection happens in captivity or the wild doesn't matter. While some species have been domesticated by humans, others have been domesticated, in the sense of reducing their aggressiveness, on their own. We are one of the species that domesticated ourselves.

DER SPIEGEL: What kind of domesticated animals are there in the wild?

Wrangham: The best example can be found among our closest relatives: the bonobos. They look very similar to chimpanzees, but their skulls show the characteristics of domestication: a shorter face, smaller teeth, a smaller brain, and reduced differences between the sexes.

DER SPIEGEL: And their behavior is more peaceful?

Wrangham: Dramatically so. When a bonobo male attacks a female, she will call for help, and within minutes the male will face an alliance of females who put him in his place.

DER SPIEGEL: Females bonobos domesticated the males?

Wrangham: Yes, probably. The bonobos live in a habitat that allows females to travel together all the time, unlike chimpanzees. This has favored social alliances among the females.

DER SPIEGEL: Are bonobos the better chimpanzees?

Wrangham: They're much nicer to each other, that's true. But of course bonobos also have some dark sides. There was this guy in France who started a commune based on the principle of living the bonobo way. He ended up in prison for pedophilia.

DER SPIEGEL: What about humans? Did women civilize us men as well?

Wrangham: That seems unlikely. There are many mythological memories of an era in which power was in the hands of women, but today there is no such thing as matriarchy anywhere in the world, and we have no evidence that there ever was.

DER SPIEGEL: If it wasn't women, who tamed men?

Wrangham: Here we enter the terrain of speculation, because fossils don't tell us exactly what happened. What we have to do instead is to see how today's hunters and gatherers treat individuals that behave aggressively. There are, in fact, even in these generally peaceable peoples, some individuals who, like alpha chimpanzees, try to dominate the others by violence. How do the members of such a community react - -- without prisons, without military, without police? There is only one way for them to defend themselves against the determined perpetrator: He is executed. The killing is done by agreement among the other men in the society.

DER SPIEGEL: You argue that this is how aggressiveness was systematically eradicated from the gene pool of mankind?

Wrangham: Well yes, aggressiveness was reduced, even if it was not eradicated. Virtue seems to have evolved from something as violent as killing. But don't misunderstand. I am not advocating executions in today's world. Justice is fallible, so the death penalty inevitably leads to the killing of innocent people; furthermore, there is no evidence that it really effectively deters people from committing crimes.

DER SPIEGEL: It is quite a daring hypothesis to argue that the death penalty has made us what we are. How did you come up with it?

Wrangham: It was when I read a book by Christopher Boehm entitled "Hierarchy in the Forest". In this book, he describes how aggression in communities of hunters and gatherers is controlled by executions. My goodness, I thought when I read this, maybe this mechanism has even shaped our evolution?

DER SPIEGEL: If anyone who strives for power is killed, does that mean there are no chiefs in communities of hunters and gatherers?

Wrangham: Yes, hunter-gatherers are very egalitarian in their relationships among men.

DER SPIEGEL: So when the fathers of the American constitution famously proclaimed, "All men are made created equal,", they were really just reanimating a principle that has shaped our species over many millennia?

Wrangham: Yeah. Isn't that fascinating? And even the fact that the Declaration of Independence only mentions men, but not women, corresponds to the situation in communities of hunters and gatherers. Egalitarianism among them only applies to men. Women, on the other hand, are dominated by men.

DER SPIEGEL: And how do you think it all began? Why did the men of lower rank eventually join together to kill the tyrant?

Wrangham: Well, it's quite dangerous to rebel against the alpha male. The one who throws the first stone will risk his life. No lion or chimpanzee would dare to do that. Only humans were able to squat together and whisper: "Let's meet at the big stone, then attack and kill him."

DER SPIEGEL: In other words, language facilitated the rebellion of the underdogs?

Wrangham: Yes, because only by discussing and planning how to kill the tyrant could they be sure that they wouldn't be harmed themselves.

DER SPIEGEL: Unlike all animals, man is capable of moral action. In your book, you claim that this is another consequence of the beta male's uprising against the alpha?

Wrangham: Yes. At some point the community of beta men united against the powerful. Then they realized that from now on they themselves had the power to kill everyone in the group. They established rules for living together, and anyone who violated them had to fear death. In this way, those who obeyed the rules were favored by evolution.

DER SPIEGEL: Submission made us moral beings?

Wrangham: You put it in a handy phrase. It may be disillusioning. But I'm afraid it was like this: Morality was born in an effort not to be targeted by the justice of the community.

DER SPIEGEL: And little by little, cowardice wrote itself into our genes.

Wrangham: Yes. And the fossil record suggests that the domestication process even accelerated.

DER SPIEGEL: Is it now complete? Or is man still taming himself?

Wrangham: There is, at least, no indication that the process has come to a halt.

DER SPIEGEL: What will we humans look like after another 10,000 generations?

Wrangham: That's speculative, of course. But if the domestication process continues as it has, we will probably look even more childlike than we do nowadays. The juvenile features will be even more exaggerated: the high forehead, the big eyes, the narrow chin.

DER SPIEGEL: The ultimate in anti-aging.

Wrangham: That's one way of looking at it.

DER SPIEGEL: Professor Wrangham, thank you for this interview.