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Why Are Corporations Hoarding Trillions?

nytimes.com

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Re: Why Are Corporations Hoarding Trillions?

#371

Post by Houshalter »

RobertoG wrote: post #360
partiallypro wrote: post #172

Earlier quoted context omitted.

Japan did massive fiscal stimulus ("bottom up") and capital injections ("top down") from the BoJ and it still has crawled compared to other economies. China has for years done intense injections into its economy (both top and bottom down), with worker training programs, state owned enterprises, etc; and now they became so reliant on the artificial demand created by their own government that they have huge slack in in…

"If the government bought wheat, for instance, to keep its price high and keep farmers employed; then burns it, this creates asset misallocations, though it is technically creating demand (this still happens to this day.)" This has been done successfully but without the burning. Just keep the price stables buying when the price fall and selling when the price goes up. The idea of a buffer should be easy to understand…

But that doesn't create demand, it just shifts it to the next year. That's not what the parent comments are talking about.

And there is no need for the government to be involved in that either. If there was really predictable price fluctuations between years, investors could make money buying up commodities on good years and selling during bad years (and they do.)

Re: Why Are Corporations Hoarding Trillions?

#372

Post by Houshalter »

jmorrow977 wrote: post #302
nradov wrote: post #265

Earlier quoted context omitted.

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 go…

But then the money would be going to engineers and other educated people, who already have decent incomes and job prospects. There is no benefit to the poorer classes with that system.

Re: Why Are Corporations Hoarding Trillions?

#373

Post by TeMPOraL »

Houshalter wrote: post #370
freehunter wrote: post #304

Earlier quoted context omitted.

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…

That doesn't really make a lot of sense. Demand is pretty predictable for stuff like that, and the producers have no reason to waste resources producing more than is necessary. And even when they do overestimate demand, like you said, it gets marked down. So it all gets consumed in the end, and the producers might not even take that big of a loss depending on how much it was marked down. And the poor people benefit f…

Except there isn't one producer, there's many competing ones, so you have overproduction because everyone hopes to get more market share than they actually have. Over that, there's overproduction in many areas (especially food) for a very silly reason - that people will buy more when there's more stuff around it (aka. no one wants to buy the last few carrots). It doesn't get consumed, and poor people don't benefit from it. It gets thrown away.

About throwing away new things - heard of planned obsolescence? That's what companies now do to cope with falling demand. Yes, your car maker does it too.

Re: Why Are Corporations Hoarding Trillions?

#374

Post by charlesdm »

rayiner wrote: post #289
charlesdm wrote: post #239

Earlier quoted context omitted.

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…

I think wealth is a very natural thing to tax. The state creates and guarantees to protect a property right in land/personal effects/corporate equity/etc. In return, it taxes you 1-2% of the value of that property right each year.

With the exception of the US, who taxes its citizens globally, I would assume this would push many people to move abroad to a country without a wealth tax. France is great and all, but I wouldn't want to be a tax resident there. If you're worth €50m, it's just too expensive.

Given you already paid capital gains tax (or income tax) when you generated that wealth, there's also the double taxation component. Wealth taxes (at least to me) seem like a great way to punish people who are doing well.

At the end of the day, we're living in a globalised world, where borders matter less and less (at least in the west).

Re: Why Are Corporations Hoarding Trillions?

#375

Post by Houshalter »

TeMPOraL wrote: post #373
Houshalter wrote: post #370

Earlier quoted context omitted.

That doesn't really make a lot of sense. Demand is pretty predictable for stuff like that, and the producers have no reason to waste resources producing more than is necessary. And even when they do overestimate demand, like you said, it gets marked down. So it all gets consumed in the end, and the producers might not even take that big of a loss depending on how much it was marked down. And the poor people benefit f…

Except there isn't one producer, there's many competing ones, so you have overproduction because everyone hopes to get more market share than they actually have. Over that, there's overproduction in many areas (especially food) for a very silly reason - that people will buy more when there's more stuff around it (aka. no one wants to buy the last few carrots). It doesn't get consumed, and poor people don't benefit fr…

Large corporations are not stupid. They have decades of sales data. They can definitely predict demand a year in advance, and they do.

I don't actually think they are overproducing. They make a huge markup on new cars, so having to discount a few that don't sell isn't a loss.

Also factories are pretty much large fixed costs. Overproducing actually doesn't cost that much. The car might only cost $500 worth of raw materials, but the cost of the factories and infrastructure necessary to turn that into a car is massive.

>(aka. no one wants to buy the last few carrots)

Which is literally only true for vegetables, not the economy in general. And you only need to sacrifice a handful of vegetables to for it, so it's a fixed cost.

Re: Why Are Corporations Hoarding Trillions?

#376

Post by simonh »

wavefunction wrote: post #198
simonh wrote: post #55

Earlier quoted context omitted.

Not really. It's a bit partisan on tone, but the actual debt graph on this article is interesting. Basically there have been three big changes in direction for US national debt since WW2. Sharp upturns on Reagan and George W's watches, and a strong downturn under Clinton's. http://zfacts.com/p/318.html

At first blush I wonder if the downturn under Clinton's administration is related to reduced defense spending due to all the base closures during that time period.

I think it's a long and complicated story. Some credit Clinton with it, others say Gingrich's did far more. Maybe partly it was luck due to the swings and roundabouts of the economic cycle. To be honest I think politicians can't really control these things, the best they can do is cause as little harm as possible. Even positive policies simply create the conditions for the economy to improve. They don't actually make it improve.

Re: Why Are Corporations Hoarding Trillions?

#377

Post by ehnto »

roymurdock wrote: post #320
EvanPlaice wrote: post #296

Earlier quoted context omitted.

I'll try by best not to sound like a raging sociopath here. In pure economic terms, curing cancer has little benefit to society. Cancer is not any one specific disease. It's a class of diseases, of which there are thousands (or more) of variants. We may stumble on some amazingly technologically advanced cure to some forms of cancer but the more rare the form, the less likely there will ever be a treatment. Most peopl…

I've been thinking along similar lines recently. One counter to this argument is that as this process of overpopulation (relative to useful jobs) begins to happen, standard of living decreases.* As standard of living decreases on average, people start to have less children. So the imbalance is somewhat self-correcting, it's just that human lives are getting to be longer while the time between inventions that obviate…

You may find that the relationship between birth rate and standard of living is the opposite of what you described.

We actually have some pretty good existing examples to draw from to conclude this. Japan has arguably the highest standard of living, but also a decreaseing birth rate.

Women in Australia and America are having children later in life, and having fewer of them as well.

Meanwhile in developing countries where access to birth control and education are more limited, birth rates are sky high.

Re: Why Are Corporations Hoarding Trillions?

#378

Post by RobertoG »

Houshalter wrote: post #371
RobertoG wrote: post #360

Earlier quoted context omitted.

"If the government bought wheat, for instance, to keep its price high and keep farmers employed; then burns it, this creates asset misallocations, though it is technically creating demand (this still happens to this day.)" This has been done successfully but without the burning. Just keep the price stables buying when the price fall and selling when the price goes up. The idea of a buffer should be easy to understand…

But that doesn't create demand, it just shifts it to the next year. That's not what the parent comments are talking about. And there is no need for the government to be involved in that either. If there was really predictable price fluctuations between years, investors could make money buying up commodities on good years and selling during bad years (and they do.)

It's not me who said that it created demand. The grandparent suggested it.

I just said that it have been used successfully as a way of buffering prices, without the need of burning anything, in comparison to this "creative destruction" that he sees as necessary.

Re: Why Are Corporations Hoarding Trillions?

#380

Post by specialist »

chii wrote: post #348
specialist wrote: post #226

Earlier quoted context omitted.

opinion that taxes on income are a bad idea Do you mean earned income, aka labor? vs unearned income, aka capital? If you are advocating the shift of tax burden from labor back unto capital, reversing policy of the last 35 years (Reaganomics), then I agree with you.

>unearned income, aka capital capital isn't unearned - it has to have come from somewhere (perhaps the grandfather generation).

It's a technical phrase, not a value statement.

Unearned income refers to income received by virtue of owning property (known as property income), inheritance, pensions and payments received from public welfare. The three major forms of unearned income based on property ownership are rent, received from the ownership of natural resources; interest, received by virtue of owning financial assets; and profit, received from the ownership of capital equipment. As such, unearned income is often categorized as "passive income".

https://en.wikipedia.org/wiki/Unearned_income

This covers the policy debate part, which you may be referring to:

https://en.wikipedia.org/wiki/Unearned_income#Taxation

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