And:
Before the crisis, businesses were net borrowers, and to the extent that they preferred to rely on internal finance, anything that increased their profits might have led to at least some extra investment. Now, however, businesses are by and large taking in more in profits than they want to invest in expanding their businesses, so they’re lending out the excess, parking it in various securities. There’s absolutely no reason to believe that taxing their corporate jets would reduce investment, or that giving them a tax holiday on repatriated funds would increase investment.
So I suspect the problem here is from a corporate perspective, there’s nothing much to invest in (say, The Great Stagnation thesis): they’re uncertain of future returns, and can maintain a certain level of productivity with minimal staffs, and that’s fine for them. The key here would be for the government to find a way to kick it up into a higher equilibrium.
(I suspect most of this money that businesses are loaning out is finding its way to Brazil, China, India, et. al., which is why they have such high inflation rates despite—in Brazil’s case, at least—having such high interest rates. Well, because of, actually.)
0 comments:
Post a Comment