American companies, especially the really BIG ones, are still collecting dead Presidents. They’ve got over two trillion of ’em. I’ve seen six-figure checks (housing), and I’ve seen seven-figure checks, in business. But I can’t imagine a check with twelve figures on it, in front of the decimal. Managers say there’s no reason to invest. That may be the last true statement to come from them, or the first. Excessive investing led all of us into this rabbit hole, where down is up and help is hurt. True, capacity utilization is quite low. But you can’t tell me there aren’t some obsolete plants out there that could be written off and replaced. If you send all the jobs to China, though, maybe it doesn’t matter.
What the upper echelon — the ones with TWO homes in Aspen each — wants instead is ever-lower taxes. Now, a national value-added tax might not be such a bad idea. It works in Europe. But the trouble is, such a revenue generator is notoriously regressive. That is to say, it would claim a much bigger piece of small incomes than of large ones. People with $50 million don’t spend very much of their gelt (But do they INVEST it?). Such a tax might be more effective at reducing sales of almost everything than even steady or rising unemployment.
And don’t listen to the mad hatters talking of how deficits are going to lead to runaway interest rates. At least not anytime soon (see capacity utilization is quite low; it’s up above). Each time interest rates go down to zilch the rich button their wallets and sit tight. Alan Greenspan, Der Fedmeister, said fourteen years ago that such things bothered him. Conditions where lower money prices failed to encourage greater use of it constituted a “conundrum.” They still do. What all this tells me is that too much of that money supposedly sloshing around the planet is held by too few hands. Oh, the stock markets are rising, but take a look at the trading volume. If that represents any kind of conviction, I’m Lady Gaga.
Here’s the simplest economics argument you’re likely to see. If the (cash-rich) companies won’t hire, who in Heaven’s name will buy their wares and services? I’m waiting . . . . I thought so. Did you say, the Chinese will buy everything? Is that what we need? Just try selling YOUR house to a Chinese family. IT’S IN THE WRONG COUNTRY, and it’s really hard to move it.
Do you suppose companies care? Why else would they be borrowing money like there’s no tomorrow? Because it’s cheap! But put it (and all of us) to work? Nope. Not even. I can easily imagine these corporate mavens gathering at the U.S. Chamber of Commerce, just waiting for one of their colleagues to make a wrong move — like hiring. Quisling! Benedict Arnold!! Instead, they promote the “party line,” wherein people staying on unemployment supposedly do so because they don’t want to work. Here’s where my Zantac is handy. Nearly all of them would LOVE to go to work, but what might you expect, when jobs that MIGHT be available pay far less than the UIC check?
See, the corporations want people to work for nothing, in addition to zero taxation. Bingo. A few jobs might even be repatriated, were the American work force to simply wise up. Get what you need at the company store, owe your employer your very LIFE, and depend on the extremely wealthy for handouts and largesse. Want to see how this would operate? Try visiting a typical coal mine in India. There are only a few.
I don’t know just how we keep from backing up past mercantilism into feudalism, but I know we’d better try. Otherwise our grandchildren will not have to worry about national debt or interest rates. They will look a lot like the victims of the recent earthquake in Haiti. And those who could help them will not act differently from those who said they’d help the Haitians. So it’s up to us.
Plug your ears. And let’s get to work.