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They've started to talk on CNBC about aggregate demand - or lack thereof. Today there was a round table discuss led by Brian saying that perhaps the goals and objectives of corporations are all wrong - that to cut expenses and jobs and hoard cash was good for the bottom line . . . but across the boad top line growth has disappeared because no body is working and therefore they can't consume. They even brought up Henry Ford as an example who preached that workers had to make enough money to be able to buy the product. duh.
Lack of aggregate demand can be traced back to the Bush tax cuts where rono said at the time that while most were great, there was not enough at the bottom end of the food chain where the marginal propensity to consume is 100%. Oh no, they were marching to the beat of supply side/trickle down economics. They ignored Demand side economics and had a 'recovery without jobs'. I said at the time that even if they make CapExp taxes zero AND they make interest rates (the price of money) zero and they print all the money in the known world . . . no company is going to build another factory or add another shift if they are currently operating at 75% of their capacity.
The problem can be traced to present day accounting and quarterly reporting of profits. It ignores the long run. Actually, if you run the calculus on the whole thing, to corporations, with short run account, us humas are inefficient and really much of a bother.
Comments
Hope you guys are warm and dry.
They've started to talk on CNBC about aggregate demand - or lack thereof. Today there was a round table discuss led by Brian saying that perhaps the goals and objectives of corporations are all wrong - that to cut expenses and jobs and hoard cash was good for the bottom line . . . but across the boad top line growth has disappeared because no body is working and therefore they can't consume. They even brought up Henry Ford as an example who preached that workers had to make enough money to be able to buy the product. duh.
Lack of aggregate demand can be traced back to the Bush tax cuts where rono said at the time that while most were great, there was not enough at the bottom end of the food chain where the marginal propensity to consume is 100%. Oh no, they were marching to the beat of supply side/trickle down economics. They ignored Demand side economics and had a 'recovery without jobs'. I said at the time that even if they make CapExp taxes zero AND they make interest rates (the price of money) zero and they print all the money in the known world . . . no company is going to build another factory or add another shift if they are currently operating at 75% of their capacity.
The problem can be traced to present day accounting and quarterly reporting of profits. It ignores the long run. Actually, if you run the calculus on the whole thing, to corporations, with short run account, us humas are inefficient and really much of a bother.
and so it goes,
peace,
rono