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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#271

Post by 13thLetter »

jonnathanson wrote: post #260
13thLetter wrote: post #221

Earlier quoted context omitted.

"Is this so bad? Falling into something of a European-type rut with permanent 8% unemployment and modest GDP gains? I remember the 90s. Everyone was buying shit non-stop. What kind of life is that?" It was a pretty fabulous kind of life. People felt rich, there were shiny new buildings going up everywhere, the government's budget was running at a surplus, there was a general feeling of optimism and hope for the futur…

But obviously the '90s were not sustainable. What we are going through today is the payback period (with interest) for Greenspan's economic policies.

"But obviously the '90s were not sustainable."

Sorry, it's not obvious to me at least. Can you explain why they weren't sustainable?

Re: Why Are Corporations Hoarding Trillions?

#272

Post by dnautics »

dnautics wrote: post #269

An alternative narrative. This is classical economic group behavior near the top of a bubble. The fed has long goosed its lending programs with cheap money, in an effort to stimulate investment, and to avoid the spectre of spiraling deflation that they were worried would happen after the short deflation of 2009. Capitalists have then, rationally gone out in search of investments to yield a return. However, innovation…

I should also say the strengthening dollar, partially due to the fed's disinflationary policy, and also due to external effects (OPEC oil activities, which are still priced in dollars) are making the dollar crazy strong relative to foreign currencies. Is disincentivising corporate spending and investment. This can't last. When the relative strength of the dollar starts to erode, take it as a leading indicator. Herding behavior will do the rest.

Re: Why Are Corporations Hoarding Trillions?

#273

Post by refurb »

TeMPOraL wrote: post #268
refurb wrote: post #235

Earlier quoted context omitted.

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?

Of course there is. The point is, we've reached the stage of our advancement when, on aggregate, we produce more than we actually need. Our current issues are with distribution of what is being produced.

Not sure that I would agree there. What if the "excess" production funds a cure for cancer? What if that cure requires additional resources?

The world isn't static.

Re: Why Are Corporations Hoarding Trillions?

#274

Post by maxxxxx »

Thriptic wrote: post #237
maxxxxx wrote: post #205

Earlier quoted context omitted.

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.

Is this really feasible in a globalized economy? If wages were constantly forced higher wouldn't companies simply offshore increasing amounts of their labor or headquarter in another country?

I don't know how you could enforce this. But as I wrote before, as long as the elite keeps capturing all gains from productivity for themselves, demand will stay low.

Maybe there are tax schemes that encourage paying higher wages but I don't know.

Re: Why Are Corporations Hoarding Trillions?

#275

Post by megablast »

sandworm101 wrote: post #188
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…

Then it is time yet again to invent new ways for Americans to consume. An economy turns not on capital but the movement of capital from one place to another (ie trade). Atm the money is with corporations. They don't actually want it. They would rather have customers buying their products than money sitting in a box. The role of government in resolving this impasse is to somehow make that parked money move again. Eith…

So the money goes back to the rich? Where it doesn't get spent.

Re: Why Are Corporations Hoarding Trillions?

#276

Post by tomcam »

jandrese wrote: post #94
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 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.…

    This is the ultimate problem with 'trickle down' economics.
What economists/politicians promote something called "trickle down" economics?

    This is why you have the seemingly incongruous effect of high taxes encouraging growth and low taxes stifling it.
Reference, please?

Re: Why Are Corporations Hoarding Trillions?

#277

Post by seivan »

hfourm wrote: post #224
seivan wrote: post #178

Earlier quoted context omitted.

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.

I hate the argument of the rich "leaving" Where are they going to go? And once you come to the logical conclusion that only a few outliers will actually "leave", they will leave a void that someone will fill, and be taxed.

I'm not sure about American prefences but in Europe people tend to use Switzerland, Monaco and Malta. In Asia, you have Hong Kong and Singapore, both relatively safe and decent countries. Maybe Macau, but I'm not sure.

You're also assuming the government can just "implement" the "ideas" you have and everything will be alright. As if they really rich will give in without resistance. It doesn't work with drugs, it won't work with money. You add laws, they find loop holes, and I'm pretty sure the private sector can afford smarter people than the government. The government will be too slow and inefficient to tackle this, unless you turn into Germany BOM ;-). So now you're spending resources to gain resources, which... might stimulate the economy, sure, heh gotta spend money to make money, aye?

Jokes aside, to make things easier, imagine the war on drugs. It doesn't work no matter how much you yell drugs are bad. You can tell "tax" the rich, but as an idea it doesn't mean shit, unless you manage to implement it, which I have my doubts.

The best solutions are always the most pragmatic ones, it can be hard to see it when ones views are clouded with personal feelings. I can admit I that there are some things I wouldn't want to compromise on.. again, Germany.

I'm also suspecting you're assuming leave as in physically leaving, you're in for a surprise when you find out that the truly rich can have the cake and eat it so no one would "fill" their void if there are options, and there will always be options for someone who is truly rich.

Otherwise you just end up taxing the shit out of regular employees, some who makes higher salaries in volatile markets.

Your conclusion isn't logical. Human nature, machines, etc etc.

Re: Why Are Corporations Hoarding Trillions?

#278

Post by force_reboot »

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…

Both freshwater and saltwater (for reference, these refer to geographical locations in the US: Chicago and Minnesota near lakes, and MIT, Harvard, Yale, Stanford, etc. near the coasts) claim that you can't run out of demand, in the long run.

These schools differ in their analysis of the business cycle, that is the fluctuations around equilibrium output that are called booms and recessions/depressions. Saltwater economists believe that you can have too little/too much demand during booms/recessions. These are generally called "out of equilibrium" conditions. Neither group claim that in equilibrium, you can run out of demand.

Source: I have a PhD in economics.

EDIT: also see vezzy-fnord's answer, most "Freshwater" economists are and were some kind of Keynesian.

Re: Why Are Corporations Hoarding Trillions?

#279

Post by force_reboot »

altonzheng wrote: post #234
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…

I wonder if there are any schools of economics that don't view demand and growth as critical. So what if demand is low? This is definitely an oversimplification, but I'm wondering, what if that means people are satisfied with what they have. Is there inherently anything wrong in that? If we create a self-sustaining economy that doesn't grow much (but still evolves) it doesn't seem like such a problem to me. Culturall…

Classical economics does not claim to want to increase demand, and Keynesian economic only wants to correct for unnaturally low (or high) demand due to short run fluctuations.

There is nothing wrong with a four hour work week. The reason people still work long hours is not careful engineering of the economy to keep demand high, but people's natural desire for essentials like healthcare, and also luxuries and status-signalling goods. Also hours seem to be decreasing in Europe, which has a different culture to the US.

Also, one (left-wing) colleague of mine made the following point to me when I said something similar about economic growth: Would I be happy to see the world level out on a 1920's standard of living, including healthcare? If not, why is the current standard of living acceptable? Especially when a given average standard of living will also entail people who are much worse off. So to raise the standard of the worst off, we most likely need growth for everyone.

Re: Why Are Corporations Hoarding Trillions?

#280

Post by ryanlol »

bsder wrote: post #264
ryanlol wrote: post #154

Earlier quoted context omitted.

But the US can't just block offshore companies from its market without absolutely destroying its economy. What do you think would happen if the US suddenly decided that no company can do business in the US without paying taxes to the US for their offshore profits?

You only have to injunct one. After a couple million in losses, they'll pay up. At that point, the threat of injunction would simply get the other ones to pay. Or, you start seizing domestic property to pay taxes on the foreign assets. Do NOT assume the government is ever powerless. It is always bigger than you.

The government might not be powerless, but exercising such power would be disastrous.

Also,

>After a couple million in losses

Leads me to believe you don't really understand the numbers we're talking about here. That's missing at least a couple of zeros.

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