“Why Are Corporations Hoarding Trillions?”
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A somewhat dated article but the question it asks is worth considering. Why indeed are corporations hoarding trillions? For the Left all that idle money could be put to good use by spending it on worthy causes. But its not as simple as that, is it? So how did this phenomenon arise and what exactly does it portend?
https://www.nytimes.com/2016/01/24/magazine/why-are-corporations-hoarding-trillions.html
Perhaps it is looting, stashing up the cash for fear of revolution, not realising that their cash will be useless but that's fetishism for you.
Vin wrote:Perhaps it is looting, stashing up the cash for fear of revolution, not realising that their cash will be useless but that's fetishism for you.Dunno Vin. Fear of revolution might induce the capitalists to splash more out on actually protecting themselves in that eventuality – e.g. buying super duper bunkers and private armies and so on – but the cash is just well …er.. sitting there. Doin' nuffink. Daft innit? Some would argue that it is the outcome of the falling rate of profit resulting from technological innovation/automation (as surplus value only derives from living labour, not dead labour). So, as the opportunities for profitable investment decline, the cash stockpiles build up. Not too sure about that though. Also, the capitalists could fritter the surplus cash away on luxury consumption – as if they are not already gorged on luxuries (how many bleedin luxury yachts do you need for gods sake?) Or maybe even philanthrocapitalism for the guilt ridden. But then why dont they? I am not too clear about any of this . In particular on 1) from whence these enormous cash stockpiles come 2) why they are not being used in some form. Maybe they are being used a strategic asset as the article suggests but that hardly suffices as an explanation So its all a bit of a mystery that "Collectively, American businesses currently have $1.9 trillion in cash, just sitting around" Thats a lot of dosh and thats only American businesses
Some experts estimate that it is around 2.5 trillion, but the real amount is 9.2 trillion and most of that pile of money is kept in others countries. The main purpose is to avoid taxation on that large amount of money, and several governments ( especially the USA ) have tried to give them a certain low tax incentive to repatriate the money, but they are still keeping them outside. There are already some countries offering zero taxation to foreign investment which means that most of that money will not be repatriated to the US or to Europe for investment. They are not going to invest that chunk of money in the USA when they can produce more profits in others countries
One of the purposes of Donald Trump and the Republican of the so-called tax reform ( the proper expression should be tax cut ) is to provide incentives for investment and repatriation of that large amount of money and to provide a boost to the US capitalist economy, but it is not going to work either when there are countries offering a better deal with zero taxation on their investments. Puerto Rico had the same incentive several years ago, and when the incentive finished they moved their factories and investment to China and Vietnam. Before Panama Puerto Rico was their paradise to keep large amount of money free of taxation
Vin wrote:Perhaps it is looting, stashing up the cash for fear of revolution, not realising that their cash will be useless but that's fetishism for you.I do not think they are scared of any revolution,( there is not any revolutionary movement in the world at the present time ) they might use the money as a reserve for any future crisis that might take place around the world.
Marcos wrote:Some experts estimate that it is around 2.5 trillion, but the real amount is 9.2 trillion and most of that pile of money is kept in others countries. The main purpose is to avoid taxation on that large amount of money, and several governments ( especially the USA ) have tried to give them a certain low tax incentive to repatriate the money, but they are still keeping them outside. There are already some countries offering zero taxation to foreign investment which means that most of that money will not be repatriated to the US or to Europe for investment. They are not going to invest that chunk of money in the USA when they can produce more profits in others countriesThe problem is, Marcos, that this doesnt really explain why such idle money is hanging around in the first place, Sure you can shift it to a low tax regime or even a no tax regime but if it is just being parked there what is the point? Also you say that these capitalists in Amercia and elsewhere are "not going to invest that chunk of money in the USA when they can produce more profits in others countries" but the point is they are not being capitalised as I understand it – that is they are not being used to produce more profit anywhere regardless of the tax situation. I can perfectly understad your argument that if they want to obtain more profit they would shift that money to a country where there was lower taxation. But the real mystery is that they dont seem to want to use that money for that purpose in the first place. Its just stting there doing nothing as the article says I can only assume that it is for some long term strategic reason that they are holding back from investing this money. It is in an attemt to find out what precisely that reason is that I posted this iterm Incidentally, do you have any links relating to the above figures you cite. I would be very interested
The point of capitalism is to invest capital *with a view to making a profit* If those profits are not there to be had the capital does not get invested..
DJP wrote:The point of capitalism is to invest capital *with a view to making a profit* If those profits are not there to be had the capital does not get invested.They are invested in banks and they are producing returns. Capitalists always need a cash reserve. Nobody will find out what their main intention is, at the present time the main reasons is tax evasion and cash reserves for future events
robbo203 wrote:Marcos wrote:Some experts estimate that it is around 2.5 trillion, but the real amount is 9.2 trillion and most of that pile of money is kept in others countries. The main purpose is to avoid taxation on that large amount of money, and several governments ( especially the USA ) have tried to give them a certain low tax incentive to repatriate the money, but they are still keeping them outside. There are already some countries offering zero taxation to foreign investment which means that most of that money will not be repatriated to the US or to Europe for investment. They are not going to invest that chunk of money in the USA when they can produce more profits in others countriesThe problem is, Marcos, that this doesnt really explain why such idle money is hanging around in the first place, Sure you can shift it to a low tax regime or even a no tax regime but if it is just being parked there what is the point? Also you say that these capitalists in Amercia and elsewhere are "not going to invest that chunk of money in the USA when they can produce more profits in others countries" but the point is they are not being capitalised as I understand it – that is they are not being used to produce more profit anywhere regardless of the tax situation. I can perfectly understad your argument that if they want to obtain more profit they would shift that money to a country where there was lower taxation. But the real mystery is that they dont seem to want to use that money for that purpose in the first place. Its just stting there doing nothing as the article says I can only assume that it is for some long term strategic reason that they are holding back from investing this money. It is in an attemt to find out what precisely that reason is that I posted this iterm Incidentally, do you have any links relating to the above figures you cite. I would be very interested
https://www.cnbc.com/2016/09/20/us-companies-are-hoarding-2-and-a-half-trillion-dollars-in-cash-overseas.html We do not need Sherlock Holmes to discover that their main purpose is tax evasion and cash reserve
DJP wrote:The point of capitalism is to invest capital *with a view to making a profit* If those profits are not there to be had the capital does not get invested..I take your point DJP but it is the sheer scale of these idle cash stockpiles that puzzles me – 1.9 TRILLION dollars in the case of US buisnesses alone! Where did it all come from? If profit is not forthcoming, production is supposed to be cut back and with that, the money that the capitalists make from their investements. So in theory, while there might be a cash surplus for a while in climate in which the expectation of profit has diminished, this should ease off with the diminution of the capitalists income. But as I understand it that hasnt been happening. These cash stockpiles have been steadily growing
robbo203 wrote:DJP wrote:The point of capitalism is to invest capital *with a view to making a profit* If those profits are not there to be had the capital does not get invested..I take your point DJP but it is the sheer scale of these idle cash stockpiles that puzzles me – 1.9 TRILLION dollars in the case of US buisnesses alone! Where did it all come from? If profit is not forthcoming, production is supposed to be cut back and with that, the money that the capitalists make from their investements. So in theory, while there might be a cash surplus for a while in climate in which the expectation of profit has diminished, this should ease off with the diminution of the capitalists income. But as I understand it that hasnt been happening. These cash stockpiles have been steadily growing
The same thing is taking place with the money from the drug traffic. One of the best customers of Wells Fargo, HSBC, and Citibank is El Chapo, one of the biggest drug dealer in Mexico, and Pablo Escobar had a large sum of money invested in banks, and he was willing to pay the debts off Colombia, Figueroa Agosto was one of the largest investors in several banks in the Caribbean. Some US senators were willing to use that drugs money to pay for the construction of the Mexican wall. With that money, banks continue their own operations making profits, investing in real estates
After the Panama Paper leak we now have the Paradise Paper leaks. One reason American corporations are hoarding is that they expect tax relief to be passed by Trump shortly on foreign earnings repatriated.https://socialismoryourmoneyback.blogspot.com/2017/10/cheating-system-it-is-system.htmlNor would bringing back the cash-hoard help the economy but merely fill the purses of the privileged even more.https://socialismoryourmoneyback.blogspot.com/2017/10/tax-reform-to-benefit-rich.html
alanjjohnstone wrote:After the Panama Paper leak we now have the Paradise Paper leaks. One reason American corporations are hoarding is that they expect tax relief to be passed by Trump shortly on foreign earnings repatriated.https://socialismoryourmoneyback.blogspot.com/2017/10/cheating-system-it-is-system.htmlNor would bringing back the cash-hoard help the economy but merely fill the purses of the privileged even more.https://socialismoryourmoneyback.blogspot.com/2017/10/tax-reform-to-benefit-rich.htmlThat is one of their main reason, and also they gave a large sum of money to lobby for that tax cut, but at the same time, there are several countries which are willing to give zero tax evasion. Before the Panama Papers, and the Paradise Papers nobody said anything about Puerto Rico which also provided zero taxation to most of the American corporation for more than 30 years.The goal is 17% taxation, but with all the deductions it will come down to almost 5%The Russian gangsters are investing a large sum of money in the banks of the Dominican Republics and that money is used to build hotels and real property, that money is not seating there taking fresh air, it is also invested by banks to produce profits.This is not new, it was being done in Puerto Rico many years ago, and they had zero taxation, and they had the so called Free Zone
Ironically, during the government of Roosevelt American corporation paid 80% to 94% taxation, and they were making profits and they did not move their operations to others countries, and the state had a large accumulation of capital, and it was able to employ thousands of unemployed workers, the state became the largest corporation of the nation
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