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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#201

Post by BrianEatWorld »

lkrubner wrote: post #175
jmorrow977 wrote: post #153

Earlier quoted context omitted.

And a major reason workers are spent out is because of high rents. If the US would build enough housing in the major employment centers that the highly skilled workers wouldn't spend 90% of their after-tax income on fixed expenses, they'd have more money to spend to drive other businesses. All the disposable income is being sucked into rents, and eventually that will make the economy run slower and slower, fewer sale…

You are assuming the answer. (The old phrase for this was "begging the question"). Someone could easily ask "Why don't the landlords, who get all that money from rent, spend it on something, and thus drive growth?" And you can easily answer that: the wealthy spend less of their income, they save more, therefore the high profits from rent increase the savings glut, etc, etc, etc. But you should state the answer direct…

In your example, aren't you implying that landlords and other wealthy individuals aren't simply not spending, but actually hoarding cash?

Most wealthy individuals aren't holding cash, they put the money in a savings account or investment that has a return. This money appears to be held to most people, but even money in a savings account makes its way back into the economy by affecting the reserve requirements of banks. Its a proportional effect, because reserve requirements are greater than 0% but lower than 100%, but it still contributes.

If they actually are hoarding, the question is why and in the past that is usually because savings returns and investment returns are expected to be negative. In which case, thats the problem to solve.

Re: Why Are Corporations Hoarding Trillions?

#202

Post by elenorelange »

secstate wrote: post #176
seiji wrote: post #124

Earlier quoted context omitted.

unpaid indefinite obligations I'm pretty sure elder care isn't indefinite. Maybe we end it after this current generation of old people (our parents/grandparents) are no longer around. One of the biggest social problems we'll face in the next 10 years is millions of people with dementia who can't take care of themselves just... existing. What do we do? One fun story I've heard is a doctor gave an old woman with full b…

Kind of like with executive power, however, once you start giving out benefits like social security, you can't put the toothpaste back in the tube. Once you reach 65 and are eligible to start receiving payments, are you going to be okay when they say "nope, well's dry?" You would if you didn't realize they had been garnishing your salary for thirty years. But anyone with any sense of responsibility would be furious i…

No one "decides". Nature takes its course.

Re: Why Are Corporations Hoarding Trillions?

#203

Post by gozur88 »

slg wrote: post #76
AndrewUnmuted wrote: post #67

Earlier quoted context omitted.

I doubt even a Republican would be willing to lower corporate income taxes. Nominal rates haven't been touched for quite a while; politicians opted instead to just allow the loopholes and safe havens to continue lowering the effective rate, and corporations seemed to be happy about that. The likely reason for corporations holding onto cash is the lesser impact deferrals can make in today's markets. Companies are beco…

>I doubt even a Republican would be willing to lower corporate income taxes. I think a lot of people expect some type of future repatriation period that would allow these companies to bring their cash stateside at a reduced tax rate during a short temporary window. It is something the government has done in the past and it probably makes sense to do again sometime soon. I wouldn't want to be the CEO who overpays taxe…

These tax repatriation deals are getting to be like "immigration reform". Once you start doing it, no matter how much you say "This is the last time! Honest!" people factor the next amnesty into their calculations. In both cases the fact that people believe it will happen increases the likelihood they are correct.

I would love to see the US corporate income tax eliminated, but this kind of one-time tax amnesty thing is bad policy.

Re: Why Are Corporations Hoarding Trillions?

#204

Post by jganetsk »

secstate wrote: post #168
Animats wrote: post #128

Earlier quoted context omitted.

There is a school of economics, sometimes called the "freshwater school" (from the Chicago School and Milton Friedman) which claims you can't run out of demand. This is a classic position. But productivity is now so good that we can run out of demand. Classically, countries ran out of land, labor, capital, or management before they ran out of demand. There were occasional recessions, but that wasn't a permanent condi…

Not claiming I have a panacea here, but wouldn't either a more aggressive minimum wage or a basic minimum income raise the ability for more people to act on the desire to buy? I assure you the demand for tons of stuff exists, but the means to buy it does not. Back in 2013, HuffPost ran an article pointing out that had minimum wage kept up with inflation, it would be $10.50/hr and actually more like $21 if it had kept…

A basic minimum income is the right answer, but not for the purpose of increasing demand. People demanding to increase demand is utterly silly. We have succeeded as a civilization: we are providing far more than we could ask for. In the big picture, what does increasing demand really do for us?

But there's definitely a need to reduce poverty. And there's a need to allow ourselves to stop working as hard as we do. A basic minimum income would help accomplish these things. Where do we get the money from? It doesn't really matter, there's plenty of it sloshing around. As Charlie Munger said:

“This has basically never happened before in my whole life. I can remember 1½ percent rates. It certainly surprised all the economists. It surprised the people who created the life insurance industry in Japan, who basically all went broke because they guaranteed to pay a 3% interest rate. I think everybody’s been surprised by it, including all the people who are in the economics profession who kind of pretend they knew it all along. But I think practically everybody was flabbergasted. I was flabbergasted when they went low; when they went negative in Europe – I’m really flabbergasted. How many in this room would have predicted negative interest rates in Europe? Raise your hands. [No hands go up]. That’s exactly the way I feel. How can I be an expert in something I never even thought about that seems so unlikely. It’s new territory….

I think something so strange and so important is likely to have consequences. I think it’s highly likely that the people who confidently think they know the consequences – none of whom predicted this – now they know what’s going to happen next? Again, the witch doctors. You ask me what’s going to happen? Hell, I don’t know what’s going to happen. I regard it all as very weird. If interest rates go to zero and all the governments in the world print money like crazy and prices go down – of course I’m confused. Anybody who is intelligent who is not confused doesn’t understand the situation very well. If you find it puzzling, your brain is working correctly.”

Re: Why Are Corporations Hoarding Trillions?

#205

Post by maxxxxx »

Animats wrote: post #88

The US is out of demand. Workers are spent out. Thus, there's no need to increase output, because nobody has the money to buy it. The US has huge excess manufacturing capacity, thousands of malls which could handle more traffic ("there's always parking at Sears", a rather pathetic ad), and services which could handle more business. There's a glut of capital, plenty of available unemployed or underemployed workers, no…

Somewhen in the last decades the decision has been made that the majority of gains should go to the top earners.

An easy way for demand to rise would be if wages didn't stagnate but went up with productivity. The top earners won't spend more money if you give them more. And new products won't be bought if no one can afford them.

Re: Why Are Corporations Hoarding Trillions?

#206

Post by [deleted] »

BrianEatWorld wrote: post #201
lkrubner wrote: post #175

Earlier quoted context omitted.

You are assuming the answer. (The old phrase for this was "begging the question"). Someone could easily ask "Why don't the landlords, who get all that money from rent, spend it on something, and thus drive growth?" And you can easily answer that: the wealthy spend less of their income, they save more, therefore the high profits from rent increase the savings glut, etc, etc, etc. But you should state the answer direct…

In your example, aren't you implying that landlords and other wealthy individuals aren't simply not spending, but actually hoarding cash? Most wealthy individuals aren't holding cash, they put the money in a savings account or investment that has a return. This money appears to be held to most people, but even money in a savings account makes its way back into the economy by affecting the reserve requirements of bank…

[deleted]

Re: Why Are Corporations Hoarding Trillions?

#207

Post by asift »

secstate wrote: post #168
Animats wrote: post #128

Earlier quoted context omitted.

There is a school of economics, sometimes called the "freshwater school" (from the Chicago School and Milton Friedman) which claims you can't run out of demand. This is a classic position. But productivity is now so good that we can run out of demand. Classically, countries ran out of land, labor, capital, or management before they ran out of demand. There were occasional recessions, but that wasn't a permanent condi…

Not claiming I have a panacea here, but wouldn't either a more aggressive minimum wage or a basic minimum income raise the ability for more people to act on the desire to buy? I assure you the demand for tons of stuff exists, but the means to buy it does not. Back in 2013, HuffPost ran an article pointing out that had minimum wage kept up with inflation, it would be $10.50/hr and actually more like $21 if it had kept…

That often cited minimum wage statistic also just so hapens to start at a time when minimum wage was near it's all time high on an inflation adjusted basis. Why do you suppose that is?

A basic income is a far better solution than our current mess of bureaucratic welfare programs that are both inefficient and rife with harmful unintended consequences for those they intend to support. Milton Friedman's "negative income tax" was intended to be a basic income until it was bastardized into the EITC.

Re: Why Are Corporations Hoarding Trillions?

#208

Post by vkou »

seivan wrote: post #178
jandrese wrote: post #94

Earlier quoted context omitted.

This is the ultimate problem with "trickle down" economics. Capital doesn't drive growth. Lack of capital limits growth, but excess capital doesn't generate additional growth. Demand drives growth and 35 years of stagnant wages (wages are basically where they were in 1981) have put a chokehold on growth. This is why you have the seemingly incongruous effect of high taxes encouraging growth and low taxes stifling it.…

Capital seems to drive a lot of jobs to create startups that hire people. They might make it or they might not but at least they produced something that might eventually grow. Without capital dev jobs. No dev job, no sale job, no marketing jobs and etc. What we both want is basic income. But I'm not sure about taxing "rich" who could easily leave. Then you're not taxing the "rich" any more.

This is only the case in frothy markets, like the Valley.

Re: Why Are Corporations Hoarding Trillions?

#209

Post by s_kilk »

npalli wrote: post #104
Animats wrote: post #88

The US is out of demand. Workers are spent out. Thus, there's no need to increase output, because nobody has the money to buy it. The US has huge excess manufacturing capacity, thousands of malls which could handle more traffic ("there's always parking at Sears", a rather pathetic ad), and services which could handle more business. There's a glut of capital, plenty of available unemployed or underemployed workers, no…

> The US is out of demand How is the US out of demand? Peak consumption years of population are between twenties and fifties and the biggest cohort of US demographics - the millennials - is just getting started. They crossed over the Boomers last year and now are the largest group. Behind them the younger (Gen Z) equally large in size is ready to backfill in another 15 years. It is true that demand from Boomers is do…

> the millennials - is just getting started...

Yeah, but they're all broke and living with their parents.

Re: Why Are Corporations Hoarding Trillions?

#210

Post by Apocryphon »

drzaiusapelord wrote: post #162
Animats wrote: post #88

The US is out of demand. Workers are spent out. Thus, there's no need to increase output, because nobody has the money to buy it. The US has huge excess manufacturing capacity, thousands of malls which could handle more traffic ("there's always parking at Sears", a rather pathetic ad), and services which could handle more business. There's a glut of capital, plenty of available unemployed or underemployed workers, no…

Is this so bad? Falling into something of a European-type rut with permanent 8-12% unemployment and modest GDP gains? I remember the 90s. Everyone was buying shit non-stop. What kind of life is that? Sure it created jobs and growth but to the ludicrous end where we refused to accept the gravy train was ending. I remember Bush 43 pleading for Americans to "go back shopping" the black friday after 9/11 when the writing…

Given our Protestant work ethic and deference to corporations, it seems like we're more likely to approach the Japanese/East Asian workaholic model to the grey late capitalist future, sadly.
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