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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#301

Post by WalterBright »

ryandrake wrote: post #19

Looks like the TL;DR of this article is: "Corporate leadership, being so much smarter than the rest of us dummies, sees something big on the horizon coming. They're saving all their cash so they can later invest because "the next transformative innovation could be just around the corner". Apparently they're smart enough to hoard all this cash, but not smart enough to know exactly what that transformative innovation i…

> Let it sit in a bank account!

Money does not sit in bank accounts. The banks loan it out. It's why there are things like "free checking" - the banks make money by loaning it out, not storing it for you.

Re: Why Are Corporations Hoarding Trillions?

#302

Post by jmorrow977 »

nradov wrote: post #265
jmorrow977 wrote: post #152

Earlier quoted context omitted.

Instead of injecting money top-down through the Federal Reserve and large banks, they could inject it bottom-up in selected industries. Invest $1 trillion in biotech. Some will succeed and produce amazing advances. Most will fail, but they'll still drive employment, education, services, etc. targeting that industry, driving down the cost of inputs to the biotech sector for decades. Of course, this can be done not com…

We don't want governments trying to pick winners, or generally even having an industrial policy at all. Their track record has been far worse than private investors. And politically it's impossible to justify when a large government investment fails. For example, look at Solyndra. At better approach to stimulating demand would be to offer a cash prize or a guaranteed purchase contract for specific innovations that me…

Well, if the government is going to drop money from helicopters, I would at least prefer they ATTEMPT to do so in a way that might lead to some scientific advancement. They could also just send everyone a check for $1000, but although that would create some demand, it wouldn't likely lead to investments in long-term payoff high-risk science. I understand and somewhat sympathize with the idea that we don't want the government telling us to do with our money, and maybe we should let people spend that $1000 however they want, but I'm proposing trying to kill two birds with one stone here and also at least ATTEMPT to put the money initially in the hands of people trying to create something rather than just consume some basic goods.

Re: Why Are Corporations Hoarding Trillions?

#303

Post by xenadu02 »

cobaltblue wrote: post #292
reddytowns wrote: post #263

Earlier quoted context omitted.

One thing I don't understand about basic income is how to deal with children. If the parents get the basic income of a child, then that will incentivize some people to have more kids simply to get more money. If you don't give basic income for kids, then people with a lot of kids won't be able to live. Of course, you can adjust the amount between the too extremes of full basic income and no basic income for kids, but…

There already are tax and welfare benefits to having children, and indeed it does incentivize having them when you really can't afford them. It doesn't seem sustainable long term, but we'll see. I don't think it's a problem with basic income any more than the current system. The bigger issue I find with basic income is that proposals typically don't include any mention of price control on the seller side and purchase…

No one who has children (and raised them without a nanny) would ever think this way. Kids are far too much work. $50k/yr wouldn't be enough

Re: Why Are Corporations Hoarding Trillions?

#304

Post by freehunter »

massysett wrote: post #295
TeMPOraL wrote: post #268

Earlier quoted context omitted.

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.

The poor would love to have newer cars, consume more services, have nicer homes, etc. So then how are we producing more than we need?

Just because some people can't afford things doesn't mean those things aren't over-produced. Every year there are a large, large number of brand new cars that don't get sold, and are marked down when the next model year comes in. Likewise there are structures that get built and never sell out. A building of condos near my house never got bought, so they turned them into apartments for far, far cheaper than they were priced as condos. We overproduce clothes so much that there are several nation-wide retail stores specializing in overstock merchandise for very cheap (TJ Maxx for example). All of these things are places where we have more than necessary production, so priced get driven down to where they are more affordable for poorer people.

The person you replied to said "production isn't the problem, distribution is", and you seemed to agree with that in your comment. Getting poor people cars and houses and services isn't a production problem, it's a distribution problem. It's a pricing problem. It's an efficiency problem. Producing more cars isn't going to make them easier for poor people to afford.

Re: Why Are Corporations Hoarding Trillions?

#305

Post by NathanLands »

pavedwalden wrote: post #283
reddytowns wrote: post #263

Earlier quoted context omitted.

One thing I don't understand about basic income is how to deal with children. If the parents get the basic income of a child, then that will incentivize some people to have more kids simply to get more money. If you don't give basic income for kids, then people with a lot of kids won't be able to live. Of course, you can adjust the amount between the too extremes of full basic income and no basic income for kids, but…

I've never bought the idea that welfare recipients would bear children strategically. Surely after the first child, they'd realize that this was a difficult way to increase their top-line income. Not sure where I'd look for data on this, but my gut feeling is that poor people who have a bunch of poorly-cared-for-children get pregnant because they're bad at planning ahead, not because they've been inventivized by a su…

Growing up in Alabama, I met tons of poor people that did exactly that and they'd tell you about it.

Re: Why Are Corporations Hoarding Trillions?

#306

Post by Outdoorsman »

First, corporations are hoarding trillions collectively, not individually...Google, the example cited is banking 80 billion...others I'm guessing, much less...

Maybe "caution" has risen a notch in the CEO/Board investment repertoire...there aren't nearly as many sure things as there used to be...why is that? The chances of making a mistake have never been greater...

A large part of the uncertainty is likely dictated by the plain and simple fact that we Earthlings have now constructed a "global economy"...countries now share many of the same opportunities and risks, even when they're on opposing sides of the planet from one another...good times and hard times can now seep across borders and continents in ways they never could before...

In any economy wages, production, living standards, etc., eventually even out across the spectrum (global), and arrive at a stasis...

When that stasis is fully realized across the globe what will daily life be like for the average American, the Chinese, those in India, etc...?

Re: Why Are Corporations Hoarding Trillions?

#308

Post by quanticle »

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…

>Most wealthy individuals aren't holding cash, they put the money in a savings account or investment that has a return.

Not necessarily true, given what the yields on savings accounts have been recently. Yes, a completely rational actor will invest capital in whatever market is currently generating the highest rate of return. But people are not rational actors. More specifically, people tend to be extremely loss averse - they will go to far greater lengths to avoid a result of -$1 than they will go to achieve a result of +$1, even though the delta (a dollar either way) is exactly the same for both situations. This loss aversion only gets worse when you scale up the numbers to -$1,000,000 and +$1,000,000.

This is why higher levels of inequality are correlated with lower growth. Capital owning rentiers are entirely happy with a 2% (or less) rate of return, so long as the risk of a negative rate of return is negligible. Meanwhile entrepreneurs who can generate much higher rates of return (but with a correspondingly higher probability of negative returns) are starved for capital.

Re: Why Are Corporations Hoarding Trillions?

#309

Post by throwaway101321 »

rchaud wrote: post #232
sgt101 wrote: post #99

Earlier quoted context omitted.

I think it's a liability. The US government can at any time tax that cash, and if Apples execs refuse to pony up then they can have fun in jail. If the US government decide to do that....

>If the US government decide to do that.... And therein lies the rub. Apple can mount a better defense than the US prosecution can, by dint of their bottomless legal fund. Apple can also put forward a united front, whereas you would need to summon an unprecedented level of political will and bridge-building to simply prevent Congress from derailing the DOJ prosecution through infighting.

How many divisions does Apple have?

Re: Why Are Corporations Hoarding Trillions?

#310

Post by tim333 »

spikels wrote: post #286

HN is a terrible place for conversations about complex economic issues. Many comments seem to be both confused about basic concepts and trying to make political arguments. Not a recipe for enlightenment.

Yeah, I've noticed the average knowledge standard for programming issues is very high, economics less so. Then again I'm not sure where you do go for exceptional conversations about economics.
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