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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#241

Post by specialist »

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…

Measuring the movement of money is called "the economy".

One strategy for "growth" could be cashectomies via taxing windfall profits, idle assets, or just because.

Another could be changing from measuring consumption (GDP) and to something else, like happiness, life expectancy, or standard of living.

Re: Why Are Corporations Hoarding Trillions?

#242

Post by stcredzero »

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…

Maybe we need to start spending these trillions on expanding out into the Solar System?

Re: Why Are Corporations Hoarding Trillions?

#243

Post by digikata »

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…

In theory that money in a savings account or investment vehicle gets circulated back into the rest of the economy, but I think what we're seeing is that cash is tied up in some sort of buffer/holding effect in the financial sector, basically accumulating in ineffective places. The bulk of the money certainly doesn't seem to be circulating through the hands of individuals where it would likely spur more economic activity than we're seeing now.

Re: Why Are Corporations Hoarding Trillions?

#244

Post by kuschku »

refurb wrote: post #235
jganetsk wrote: post #204

Earlier quoted context omitted.

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 b…

We have succeeded as a civilization: we are providing far more than we could ask for. Really? There is nothing you could improve in the human condition that would make life better?

For those people with an excess of capital, with current knowledge of science, no.

For the people with no excess of capital, though, we can improve the situation.

Re: Why Are Corporations Hoarding Trillions?

#245

Post by humanrebar »

charlesdm wrote: post #239
jmorrow977 wrote: post #183

Earlier quoted context omitted.

I'm coming around to the opinion that taxes on income are a bad idea. Income flows to people as they're trying to accumulate wealth, trying to climb from lower to middle to upper class. Higher taxes on income, especially highly progressive taxes, make it harder for people to move between social classes. The focus on income tax creates a situation where the person who makes $200k/yr but has a net worth of $0 gets taxe…

I'm all for higher taxes on capital, maybe with some exceptions on the amount of capital gains tax to pay on your first €10m. But honestly, a wealth tax is just demotivating. Not every wealthy person invests their new found riches. It makes sense only to tax gains from investments, but only gains. Not making money on your capital? No problem, you don't pay. If you are, you do pay extra tax. I don't even think it's a…

> Second point against a pure wealth tax: some of that wealth might be tied up in very illiquid assets

Isn't this an argument against real estate taxes in general, which are universally accepted? There are mechanisms to recover those taxes eventually.

Re: Why Are Corporations Hoarding Trillions?

#246

Post by leeleelee »

There's a saying something along the lines of:

"if somebody owes you a million dollars, they've got a problem. if somebody owes you a billion dollars, then you've got a problem."

I could be totally wrong, I'm not an economist -- but I think you encounter problems when you want to earn, let's say, 10% on $80 billion. To give an extreme example:

If you give me $1 and want a 100% return on your money, then hell yes I can double your money in a day and give you back $2. If you give me $1 million then I'm going to have trouble earning you much more than whatever a savings account offers, like 2%, because I don't have a way to put that much money to work.

Money doesn't magically grow, you give capital to somebody who's going to do something with it like pay some workers to produce a widget and sell them, making more money than they spent building widgets. When retail investors put money in a bank or in the stock market and it grows, it seems like it's just an automatic outcome. But somebody on the other end, after the money changes hands hundreds of thousands of times, has to be able to put that money to work.

Where are corporations collectively just going to dump trillions of dollars and expect it to magically grow?

Re: Why Are Corporations Hoarding Trillions?

#247

Post by vezzy-fnord »

Animats wrote: post #128
partiallypro wrote: post #115

Earlier quoted context omitted.

That's not "trickle down" economics, which is not actually a real thing at all. That's a nonsensical political term that the Democrats seized upon during Reagan's "supply side" economic policy; which has beginnings much earlier than Reagan, and likely older than Jean-Baptiste Say's formulation. There isn't an idea that alone "capital drives growth," that's an idea that Keynes came up with by misreading Jean-Baptiste…

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…

Freshwater and saltwater are anachronistic distinctions that no longer apply. They were highly aggregated and misleading definitions even when they were relevant.

The Chicago School has always been quite diverse, from its early days with Frank Knight, Jacob Viner and Henry Simons to later periods of law and economics, new institutionalism and other tendencies.

Saltwater/freshwater came about because of a dispute in the dominant neo-Keynesian macro at the time (which both sides subscribed to) regarding the IS-LM model and the Phillips curve unemployment-inflation trade-off. Naive expositions of IS-LM had ignored the money demand function, which Friedman pointed out and ended up kickstarting the monetarist controversy. Phelps and Friedman also discovered a flaw in the absolutist Phillips curve and augmented it for rational expectations in 1968, destroying its former validity and anticipating the ensuing stagflation. This influenced Barro and Lucas to start the rational expectations revolution in macroeconomics, but it ended up being taken overboard to model always-clearing markets and other perfections.

Make no mistake, though. Both sides were operating in the same general framework. Most Chicagoites absolutely did not deny that there could be aggregate demand shortfalls. They were mostly Keynesians like the rest.

Re: Why Are Corporations Hoarding Trillions?

#248

Post by humanrebar »

greedo wrote: post #93
phkahler wrote: post #25

Earlier quoted context omitted.

>> The current US debt is over 18.900.000.000.000 Am I getting the author right that the US managed to put on 18 B $ in 20 years?! Google image search: https://www.google.com/search?q=US+debt&biw=1217&bih=755&sou... Check this one: http://wolfstreet.com/2014/12/02/us-national-debt-jumps-181-... So not quite, but at the end of Clinton there was a small surplus. Bush looked at that surplus and said the following: 1) Th…

There was only a surplus if you included Social Security funds that are (IMHO) mistakenly considered general revenue.

> ... Social Security funds that are (IMHO) mistakenly considered general revenue.

Why? Social security has always been a tax and a welfare system.

Re: Why Are Corporations Hoarding Trillions?

#249

Post by hellbanner »

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…

This is exactly what http://thelightsinthetunnel.com predicts will happen.

Re: Why Are Corporations Hoarding Trillions?

#250

Post by kuschku »

JustSomeNobody wrote: post #108
rodgerd wrote: post #106

Earlier quoted context omitted.

> The CEO of WarMart has mentioned this So a business model of screwing every penny out of your staff and suppliers can result in customers too poor to buy your merchandise? Who could have forseen this?

How much do you want to pay for goods in order for that cashier to make 40K?

Less than you pay at Walmart.

When Walmart tried to compete with ALDI in Germany, they couldn’t. They gave up after just a few years, because ALDI managed to have lower prices and higher wages, because they had optimized every single process to maximum efficiency.

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