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Corporate hoarding and sabotage

September 16, 2010

Here are three interesting and damning statistics:

1) Capacity utilization for the US industrial sector is 74.7%.

2) US corporations are sitting on a mountain of cash – $1.84 trillion, the highest ever.

3) Corporate Profits are near record highs.

If this mountain of cash were used to expand the economy by leveraging additional credit at a conservative 3 to 1 ratio, the $1.84 trillion would grow to nearly $6 trillion of potential new investment and purchasing power that is being withheld from society.

This is hoarding on a massive scale.  Early 20th century institutional economist Thorstein Veblen called it ‘sabotage’ – the “conscientious withdrawal of efficiency” in order to maintain prices.

The failure to reinvest funds in productive investment in order to maintain profits is anti-social behavior that should be fought through tax policy.  Unemployment could be drastically reduced and real incomes raised if it were not so easy to sabotage production and new investment.  We should institute a hoarding tax in which corporations and wealthy individuals are given a choice – invest in new productive assets or pay a tax to compensate society for lost output and unemployment.

There is no inherent right to withhold productive capacity from society.  How dare these modern day robber barons sabotage the economy while simultaneously lecturing us on the need to cut deficits, ‘entitlements’, and their taxes.

From → Wealth & Poverty

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