Just look at the amount of money which is flowing straight to corporations’ bottom lines, and not being put to good, productive work. Corporate profits now account for significantly more than 10% of GDP: that’s never happened before.Felix continues on to mention something I asked a few months ago:
To spell this out: high corporate profits and low levels of job growth are two sides of the same coin. If things were working properly right now, companies would take their excess revenues and use them to hire more people. Instead, they’re basically just letting those excess revenues sit on their balance sheets as cash because they’re scared to invest in themselves. It’s frankly pathetic.
The solution to this problem is nothing complex — the arbitrage is sitting there in the first chart, plain for all to see. The government can borrow at 1.45%: it should do so, in vast quantities, and invest that money back into the economy itself. Take a few hundred billion dollars and use it to fix our broken infrastructure, to re-hire all those laid-off teachers and firefighters, to provide some kind of safety net for the millions of Americans who have been out of work for more than a year. Even if the real long-term return on any stimulus package was zero, the nominal long-term return would be well over 1.45%, making the investment worthwhile.As I've written here before, we may very well look back upon this period as a time of tremendous lost opportunity. With interest rates at historic low levels, and the economy likewise at historically depressed levels, what the government should be doing (and should have been doing) is borrowing hundreds of billions of dollars at a real interest rate of less than zero to spend on long-delayed infrastructure projects, hiring workers and generally getting the economy back on its feet. Yes, classic Keynesian economics. But the crucial difference in this case is that we have an economy that truly needs such stimulus and we're fortunate to have such incredibly low rates to fund such desperately needed stimulus. It's a complete no-brainer and yet because of continued partisan intransigence, the nation suffers.
Republicans want the economy to remain in the toilet. They've always wanted this. They have nothing else to run on, so they must continue to insure that the economy does not recover. It's their only shot at ousting Obama. "Country First" -- right....