Subscribe to Common Dreams News Updates
Most Popular This Week
Popular content
Today's Top News
Published on Wednesday, September 1, 2010 by CommonDreams.org
Billions for Acquisitions, Nothing for US Workers
Trickle-Down Mythology: Corporations Sitting on Mountains of Cash and Workers be Damned
When
PBS’ corporate-friendly Nightly Business Report (NBR) airs a story at
the top of its newscast about a major blockage in the corporate
‘trickle-down’ pipe, you know the jig is up.
On August 30th, NBR did just that.
In her setup to this fascinating little segment, NBR host Susie Gharib opened with the words: “Well, American companies are sitting on a pile of cash. But they're not using it for hiring. They are using the money for deal-making.”
The story that followed pretty much confirmed what most Americans have suspected all along: So-called ‘trickle-down’ economics never did work as advertised. And when it comes to spreading the wealth, corporate trickle down is turning out to be a very bad joke -- one that American workers don’t find very funny.
Introducing her story, NBR correspondent Erika Miller announced: “Consumers are not the only ones holding on tightly to their cash these days. Corporations are too … Non-financial companies in the Standard & Poor's 500 have a record $837 billion in cash in their coffers.”
“That’s enough to pay 2.8 million workers -- basically, the entire population of Chicago -- $100,000 a year for three years.”
“But,” added Miller, “one of the few places companies are spending money is on is on mergers and acquisitions. With one day left, August already has the highest value of global M&A deals this year.”
Notably, only days before the NBR story was aired, Thomson Reuters had released a study revealing that a whopping $200 billion worth of corporate deal-making took place in the month of August alone – that’s $200 billion in mergers and acquisitions (known as M&A’s in corporate circles). The study was followed by an August 27th Reuters report sporting the following headline: “August's $200-billion in takeover announcements is unlikely to provide enough of a spark to energize equity markets fretting about another dip in global growth.”
Yet, while Reuters waxed anxious about “energizing equity markets,” their concern with record US unemployment seemed oddly limited -- to the problems those unemployment numbers posed for investors.
“The steady flow of bleak data on the US jobs market and consumer spending on both sides of the Atlantic over the past few weeks has been at the heart of investors' worries, and the prospect of an M&A tide is adding to fears over jobs,” wrote Reuters.
What the news agency didn’t mention was anything about how far the billions spent on M&As might have gone toward “putting America back to work.”
So much for corporate America’s professed commitment to that worthy goal.
Damn the workers, full speed ahead
By now, anyone familiar with 21st century ‘corporatese,’ understands that when corporate news agencies refer to “the economy,” they are actually talking about corporate profits – jobs or no jobs.
So, when NBR’s Erika Miller observes that corporate mergers often lead to layoffs, and hastens to add that Americans “may take some comfort in knowing that a flurry of deal-making is often a positive sign about the outlook for the economy,” we know what she means.
These corporate elites don’t give a damn about unemployment numbers. Well, they care, but only insofar as those numbers impact their bottom line. Which explains why, on August 20th, despite an anticipated loss of another 100,000 jobs in August, Public Radio’s Alisa Roth glibly observed on MarketPlace: “A lot of companies have saved so much money, they can pay cash [for their acquisitions]. And it's cash they don't necessarily know what else to do with.”
“When the stock market's valuation is low,” added MarketPlace guest and equity analyst Brad Hintz, “it's actually cheaper to go out and buy whole companies … than it is to go out and hire workers and invest in new plants and equipment.”
Trickle down was (and still is) DOA – can we please admit it now?
Back in 2001, economist Thomas Sowell wrote in Capitalism Magazine: “There has never been any school of economists who believed in a trickle down theory. No such theory can be found in even the most voluminous and learned books on the history of economics. It is a straw man.”
Sowell’s words were never more true than they are today.
Oh, and by the way, NBR wrapped up its ‘corporate hoarding’ segment with this intriguingly ‘corporatesque’ outro:
On August 30th, NBR did just that.
In her setup to this fascinating little segment, NBR host Susie Gharib opened with the words: “Well, American companies are sitting on a pile of cash. But they're not using it for hiring. They are using the money for deal-making.”
The story that followed pretty much confirmed what most Americans have suspected all along: So-called ‘trickle-down’ economics never did work as advertised. And when it comes to spreading the wealth, corporate trickle down is turning out to be a very bad joke -- one that American workers don’t find very funny.
Introducing her story, NBR correspondent Erika Miller announced: “Consumers are not the only ones holding on tightly to their cash these days. Corporations are too … Non-financial companies in the Standard & Poor's 500 have a record $837 billion in cash in their coffers.”
“That’s enough to pay 2.8 million workers -- basically, the entire population of Chicago -- $100,000 a year for three years.”
“But,” added Miller, “one of the few places companies are spending money is on is on mergers and acquisitions. With one day left, August already has the highest value of global M&A deals this year.”
Notably, only days before the NBR story was aired, Thomson Reuters had released a study revealing that a whopping $200 billion worth of corporate deal-making took place in the month of August alone – that’s $200 billion in mergers and acquisitions (known as M&A’s in corporate circles). The study was followed by an August 27th Reuters report sporting the following headline: “August's $200-billion in takeover announcements is unlikely to provide enough of a spark to energize equity markets fretting about another dip in global growth.”
Yet, while Reuters waxed anxious about “energizing equity markets,” their concern with record US unemployment seemed oddly limited -- to the problems those unemployment numbers posed for investors.
“The steady flow of bleak data on the US jobs market and consumer spending on both sides of the Atlantic over the past few weeks has been at the heart of investors' worries, and the prospect of an M&A tide is adding to fears over jobs,” wrote Reuters.
What the news agency didn’t mention was anything about how far the billions spent on M&As might have gone toward “putting America back to work.”
So much for corporate America’s professed commitment to that worthy goal.
Damn the workers, full speed ahead
By now, anyone familiar with 21st century ‘corporatese,’ understands that when corporate news agencies refer to “the economy,” they are actually talking about corporate profits – jobs or no jobs.
So, when NBR’s Erika Miller observes that corporate mergers often lead to layoffs, and hastens to add that Americans “may take some comfort in knowing that a flurry of deal-making is often a positive sign about the outlook for the economy,” we know what she means.
These corporate elites don’t give a damn about unemployment numbers. Well, they care, but only insofar as those numbers impact their bottom line. Which explains why, on August 20th, despite an anticipated loss of another 100,000 jobs in August, Public Radio’s Alisa Roth glibly observed on MarketPlace: “A lot of companies have saved so much money, they can pay cash [for their acquisitions]. And it's cash they don't necessarily know what else to do with.”
“When the stock market's valuation is low,” added MarketPlace guest and equity analyst Brad Hintz, “it's actually cheaper to go out and buy whole companies … than it is to go out and hire workers and invest in new plants and equipment.”
Trickle down was (and still is) DOA – can we please admit it now?
Back in 2001, economist Thomas Sowell wrote in Capitalism Magazine: “There has never been any school of economists who believed in a trickle down theory. No such theory can be found in even the most voluminous and learned books on the history of economics. It is a straw man.”
Sowell’s words were never more true than they are today.
Oh, and by the way, NBR wrapped up its ‘corporate hoarding’ segment with this intriguingly ‘corporatesque’ outro:
Scott Wren (Wells Fargo Equity Strategist): “Right now people are hesitant to hire because they're able to pick up companies, do it quicker, build their business quicker, at least in a strategic sense, without having to hire new people in, without having to train those people, without having all of the up-front costs that it takes to really organically grow the business you're in.”
Erika Miller: “So what will it take to get firms to abandon their cash-hoarding mentality and start hiring again? Experts say businesses need to see a strong recovery in consumer demand.
“And that's not expected as long as the job market remains weak.”
- Posted in
Comments are closed
24 Comments so far
Show AllThanks for this article. Glad to see this is finally getting press.
However, prepare for the talking point (red herring) -- "Corporations can't spend their cash because of uncertainty about Obama Care."
Someone wrote: "Give a poor man $100 and he'll spend it, but give a rich man $100 and he'll invest it in a factory (located overseas...)"
The ONLY way to get our money, jobs, economy, country, etc. back will be to TAKE it. And you better believe they ain't gonna give it back without a bloody serious fight. They are willing and wanton to dig your newborn babies eyes out with their manicured fingers, so as to serve them up as an appetizer. What are you willing to do to them to take back what they have stolen, and prevent them from stealing the rest of what is left?
It is past time for us to start our own "trickle down" program. The blood from their bashed in heads trickling down into the gutters.
Nothing else will ever be effective in gaining their attention.
Terrible. Yet sadly true.
The tricky part is defining "they"...
I see they/them on TV most everyday. I think I could pick'em outof a line-up.
>^^<
Not at all. Our social interactions are dominated at all levels by a very simple model - control or be controlled, with money as the means of control: boss-worker, landlord-tenant, owner-owned. Our entire lives are run by this mechanism, it is pervasive and obvious. It has nothing to do with good and bad individuals, it is the system, the dominant model for social interaction that is the problem. "They" will be whomever insists on protecting that destructive and inhuman model for social interaction, insists on enforcing against all of us. "We" will be those fighting for freedom, the freedom to interact and live our lives in ways that are not dictated and controlled by the ownership model.
We will be fighting for freedom. They will be fighting to keep us down.
It is no more difficult today to see who "they" are then it was for the Abolitionist before Emancipation. And then as now, it was not the individual slave owners who were evil, it was the system that was evil, and then as now "they" means those who would defend that evil system. Many who defend the current system will be owners, just as then many who defended the system were slave owners. But not all, and again, it is not about good and bad individuals.
Trickle-down? I've always called it the "Piss down" theory ...... always will.
Anyone know just what the CEO's do to deserve the multimillions they are making? There are plenty of biz school grads out there - time for some of that real free-market competition we always hear about to be implemented at the top levels.
CEO's have the godlike ability to say who lives and who dies. Who prospers and who fails. Pretty important skill set I'd say.
Especially considering they never meet most of the people they cast-down or build up.
>^^<
Which came first: the unemployed, or zero ring-ups at cash registers?
Verno's comment is right on target.
I whipped out today's piece in a bit of a frenzy, but plan to write a more extensive piece (more names, numbers, stats, et al) addressing not only the massive corporate "urge to merge" trend and its impact on the US workforce, but also the ways in which those same corporations avoid picking up anything resembling "their fair share" of the tax burden -- you know, the one all the teapartyers are so upset about ... slv
http://www.huppi.com/kangaroo/L-overclass.html
Thanks, great article!
You and readers of this article might find the attached link interesting, I just ran across it tonight for the first time. It talks about how the CIA was involved in the rise of the Overclass over the last 25 - 35 years. It is long and seems pretty well researched, and appears to explain pretty well why we little folks find ourselves in our current dire straights.
This is all the product of listening to the neo fascist crackpot scumbag Milton Friedman and his deranged shcool of economic terrorists at the Chicago School of Economic murder, thuggery, government overthrow, and labor destruction. This is all capital accumulation and manipulation and has nothing to do with developing a real economy. Until we can make those cats walk backwards we'll never have a truly just society.
I'll check out that link, NC ... and to Chrisdutch, I wholeheartedly agree about Milton Friedman and "his deranged school of economic terrorists." As far as getting them to "walk backwards," do you think, in doing so, they might stumble into the "real economy" where the rest of us live?
The internal logic of Capitalism dictates the very results we see today. Want different results, use a different economic system. Want to take on a pointless sisyphean task? Try to "fix" Capitalism so that it becomes a life-affirming economic system.
I'd settle for the Glass-Seegal rules and the other restrictions back in place. It may not be life affirming but at least it's not so distructive, as long as the rules are enforced.
>^^<
Don't make the mistake - a mistake chronically and almost universally made by liberals and progressives and even self-described Socialists - of promoting what you would settle for as your initial demand.
When will the US boss class order the mass class to march into the ovens?
It will be a sight to see.
It seems fairly certain that most of the 300 million USers will obey their masters.
I don't know why you guys pick on capitalism all the time. I mean look at the money being made in the drug industry. Sure there are risks but thats what makes capitalist a breed apart. Look at Mexico and Columbia for instance. Years ago most of the drug lords were just poor people. Once they learned how to produce a commodity they were able to sell it on the free market. Pretty soon because they had a good product they built up a demand. Pretty soon they became involved in local politics and their communities creating thousands of jobs in law enforcement. Wouldn;t you know it the local politicians kept raising taxes to pay for enforcing regulations against selling a product that people were standing in line for. This is why I am against regulations except fot making sure that my product is kept illegal. Seems people like to break the laws. Anyway we have produced many new products now and expanded our business. We produced a better mousetrap you could say. Anyway we keep getting bigger and bigger. We throw the best parties, have the best women, biggest celebrities and all the politicians at our doors wanting campaign contributions. The law and order politicians do our bidding by keeping drugs illegal and shouting down any reformers that want to legalize drugs. I mean come on everybody knows who we are. We drive fancy cars, live in mansions, have armed guards protecting our properties and are seen with all the right people. I want to thank my friends, Richard, Ronnie baby, George and georgie boy. These guys have been great for business. Thanks guys for being the friend of capitalism. Gotta go now I smell money. Love ya To all you gringos out there. Thanks!
The only ones who can hate, are the ones who lost. Of course todays odds make a casino owner blush 95% lose 1% win 3% place? goodness who'd like to play those odds?
Even with free drinks.
>^^<
I want to puke on an economist every time I hear the words low consumer confidence. What about the simple words "we're fucking broke."
There are some inherently evil aspects to 'capitalism' as we know it today - but it needn't be that way. There are ways to structure capitalism so that it won't harm ordinary people. The rub is that ordinary people are not making the rules - and never could (especially under present circumstances), which is why a functioning republic is necessary. (We have a dysfunctional republic right now, and it's not practicing 'capitalism' - this is fascism.)
Capitalism should NEVER be applied to the necessities of life - ie, food, water, shelter, education, security, healthcare, media access, transportation, politics, etc. After all, our economic system is supposed to serve society - not the other way around. I don't see a viable alternative to capitalism - I think it's been around ever since humans learned to make and use tools. The destruction of 'the commons' is the problem - that and corporate charters and standing armies. (Both of the latter were identified as dangerous by the US founders.)
In this day and age, do we really need corporations for anything? If there is a project that requires massive amounts of money, planning, and manpower for execution - shouldn't that be a 'community project' - or national endeavor, like the US freeway system? (I'm not endorsing freeways, mind you - just using the example of how this works - maybe the post office is a better example.)
Resources must be nationalized - there is no excuse for national (or even global) resources to be 'privatized' - that's where everything falls apart. That's how the antisocial element gets its foot in the door - the camel's nose into the tent, so to speak. Projects of varying size can be handled at whatever level is appropriate - community, regional, state, or national. And no 'externalizing' the costs - especially to the most important 'commons' - the environment. Raping and pillaging the planet is NOT in the best interests of humanity!
Knowing the history of Lysander Spooner's American Letter Mail Company and how it took a government-enforced monopoly to keep the US Post office in business rather than its competition, I don't know that the Post Office is a good example either.
Railroads perhaps?
Or perhaps we could look forward to building sustainable cities like the ones envisioned by Buckminster Fuller?
Maybe you can start to understand why I want a law passed banning all cults from the state.
and by state I mean the whole state: the police, the security services, parliment, judges the NHS, the state!
Will a Law pass banning cults from the state? NO! Why because all the cult members in the government and outside it will work to stop that happening- They care nothing for socitey they are out for them selves and their power!
'Fuck the people' seems to be there motto!
A cult member will alway serve their cult first, therefore it is undemocratic to allow them into government..
and this way they screw the worker even more....
armybrat has it right ... necessities and national resources should not be privatized ... of course, if we ever get to the point where the necessities of life are publicly owned, I fear the next debate will be over what constitutes "necessities." I would argue, for instance that health care is a necessity. Food is a necessity, but how would food producers react to that product being publicly owned?