Sunday, April 13, 2014

Corporate Cash Hoarding Is Killing the Middle Class

From AlterNet, Florida representative Alan Grayson reads for us the writing on the wall:

As that finance newsletter proudly states, huge corporations don’t spend their money; they just sock it away. And the same thing is true of rich people, and banks, and multi-national corporations. The 400 individuals on the Forbes 400 list alone have accumulated more than $2 trillion in wealth, the great majority of which remains in their pockets year after year. We are ending up with enormous pools of cash that have been drained from the real economy, and are not reinvested in it. We have a national economy with a maximum possible economic output of $16 trillion each year, but much of it ends up in deep pockets with no holes, just sitting there. This creates a massive and chronic shortage in “aggregate demand,” a problem that John Maynard Keynes accurately described 75 years ago. If we allow demand to fall short, then unemployment explodes. Hence we paper over the evaporation of all that money from aggregate demand with federal deficits, “quantitative easing” and enormous personal debt.

More here.

As Marxist economist Richard Wolff has asserted endlessly, we don't have a massive debt/deficit problem due to reckless spending and a Big Government out of control.  Rather,we have a deficit/debt problem because, starting in the 1970s, we stopped taxing where the real wealth actually resides.  Adding insult to injury, a lot of that money, maybe most, which previously came into the federal government as tax revenue, is now loaned to us by the very same people we no longer tax.  Win/win for them.  Lose/lose for everybody else.  So the deficit is a bullshit "crisis" which, when you throw in militant and willfully ignorant Tea Party activists to the mix, now periodically threatens to upend the entire global economy, what with weird debt-ceiling posturing, and never-surrender budget negotiations.

But that's not even close to the end of the story.  As Grayson observes in his essay, this corporate cash-hoarding, when coupled with similar behavior from fabulously wealthy families and individuals, effectively renders inert as much as A QUARTER of the entire GDP.  That's because they just sit on this money--the old wives' tales about how throwing money at the rich stimulates the economy have been proven false by actual economic studies on multiple occasions.  So big business and the extraordinarily rich literally impede economic growth.  And when that happens, most of us suffer in countless ways.  Not them, of course, never them.

We really, as a civilization, need to get over this mindless worship of these masters of capital.  In the end, they're parasites on society, and we should squash them like the blood-sucking bugs they are.  Or tax the hell out of them.  One of those two.  Squash them or tax them.  I'm cool either way.