Who Hijacked Our Country

Thursday, July 15, 2010

If Corporations Keep Getting More Money, They’ll Create More Jobs


NOT


Trickledown — the most absurd intelligence-insulting urban legend of the past thirty years — has now been officially laid to rest. It was a scam; a trillion dollar prank. Stop falling for it!

The linked article starts out with:

“Corporate America is hoarding a massive pile of cash. It just doesn't want to spend it hiring anyone. Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession.”

In a survey last month of more than a thousand chief financial officers, a majority said they’re projecting a 12% earnings increase but aren’t planning to do much hiring.

Between 1980 and 2006, the average cash-to-assets ratio for American industrial firms more than doubled. Zachary Karabell, president of River Twice Research, said:

“CEOs don't like taking risks. They kind of move in packs. There's not a whole lot that you could do to entice companies to hire. You could cut taxes on them, but they're not going to hire just because they have the extra cash, because they already have the extra cash.”

That pretty well sums it up.

The Easter Bunny, Santa Claus, the Tooth Fairy, Trickledown — three of those four legends are only believed in by children. But millions of grown-ups (chronologically anyway) keep on believing that if we get rid of all business regulations and shower businesses with tax breaks and tax subsidies, these companies will create so many jillions of new jobs, your head will be spinning.

Wanna buy a bridge?

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14 Comments:

Anonymous Tim said...

Yeah a bridge over the river of no return.
Since the days of the Jelly bean President I've said the definition of trickle down economics is a golden shower fro the rest of us.
I for one am tired of being pissed on.

I still hear the Republicans trying to resurrect this antiquated idea.

July 15, 2010 at 3:59 PM  
Blogger jadedj said...

I believe we already bought that bridge, many times over.

Anyone who believes that corporate execs are going to suddenly become human, and concerned about their fellow man because they have the extra cash to do it...is batshit crazy. This is precisely why they own congress...to avoid that very thing, and to acquire more extra cash...for golden parachutes, etc.

July 15, 2010 at 4:09 PM  
Blogger Dave Dubya said...

Hoarding cash during depressions and severe economic constriction should be a criminal, punishable and/or taxable offense.

July 15, 2010 at 9:33 PM  
Blogger Randal Graves said...

Seriously Dave? I'm not allowed to keep these 6 or 7 singles in my wallet?

July 16, 2010 at 7:05 AM  
Blogger Demeur said...

Didn't Dim son's father refer to this as "voodoo economics"?

July 16, 2010 at 8:02 AM  
Anonymous Anonymous said...

Hoarding cash during depressions and severe economic constriction should be a criminal, punishable and/or taxable offense.

How about raisng taxes and energy cost on strugling families??

It's their friggin money

July 16, 2010 at 8:10 AM  
Blogger TomCat said...

The problem is this, at least in part. Automation and economies of scale have made our workforce so efficient that most companies can make plenty of money without adding employees. Wages are so depresses that there are more working poor than ever before.

A really long term solution will require a restructuring of the way we distribute wealth.

July 16, 2010 at 9:47 AM  
Blogger Tom Harper said...

Tim: A golden shower, LOL. I too am tired of being pissed on.

jadedj: You're right, we keep buying that bridge over and over. 7-figure bonuses and golden parachutes are much more valuable than creating jobs and building a better product.

Dave: I like all three of those.

Randal: Nope. Hand it over.

Demeur: Yup, that's the exact phrase Bush 41 used when he was running against Reagan in 1980.

TomCat: You're right, but unfortunately "long term" and modern-day America don't go hand in hand. Corporations just want to make maximum bucks Now, and hell with tomorrow. And politicians (on both sides) would rather come up with soundbites and slander their opponents than come up with anything as dull as a workable solution.

July 16, 2010 at 12:39 PM  
Blogger Lew Scannon said...

I hate to get all supply side on everybody, but those companies that have the extra cash stashed are the ones more than likely to survive through times of financial crisis such as the Great Recession. Incentives for companies to hire American workers, investing in our communities (with penalties for backing out of deals) are the only thing that will get this economy back on track. Adding more taxes is just going to drive these ticks farther into our skin.

July 16, 2010 at 3:28 PM  
Blogger Tom Harper said...

Lew: Well we certainly don't want to drive those ticks further under the skin now, do we. I'm in favor of using lower and higher taxes/fees as incentives and penalties so that companies will want to hire more people and invest in the communities where they're located.

July 16, 2010 at 4:38 PM  
Anonymous Anonymous said...

You could make the argument that those companies got that extra cash due to their Bush tax Cuts which was supposed to stimulate jobs.

Then why are they asking for more tax breaks and cuts?

Erik

July 16, 2010 at 7:17 PM  
Blogger Tom Harper said...

Erik: I guess we're supposed to just keep showering them with more tax cuts and fewer regulations until they're finally wealthy enough to start creating jobs.

July 16, 2010 at 8:24 PM  
Anonymous Anonymous said...

Lew

The reason why Supply side never worked, is that every time we give them tax breaks to have more money so they can invest in more jobs?

They usually wind up either keeping it, sheltering it or reinvesting it in some sort of buy out which narrows the market share and further reduces jobs.

Unless you specifically tell them what to do with the money (which we never do) they can do anything they want with it.

Erik

July 17, 2010 at 1:31 AM  
Blogger TomCat said...

Too true, Tom.

Erik, that's a great point and exactly what banksters are doing with their free loans.

July 17, 2010 at 9:32 AM  

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