As we all know we are recovering from the Great Recession so slowly that many are saying this qualifies as a depression. As Paul Krugman describes it we are in a “liquidity trap,” basically there is very low demand for goods and services hence businesses aren’t expanding, hiring back, etc. At the same time businesses and wealthy individuals have accumulated a great deal more wealth than they have in the past. Estimates of corporate cash reserves are pushing $3 trillion dollars.
Dr. Krugman has said that he has doubted that corporate and individual hoarding of wealth has had much of an effect on the recovery but has changed his mind; here is how he puts it: “So, I’ve had a mild-mannered dispute with Joe Stiglitz over whether individual income inequality is retarding recovery right now; let me say, however, that I think there’s a very good case that the redistribution of income away from labor to corporate profits is very likely a big factor.”
The phrase “the redistribution of income away from labor to corporate profits is very likely a big factor” caught my eye. Current corporate wealth cash piles have been created by manipulating tax laws, by bribing or threatening our officials (you know, give us tax breaks or we are moving our corporate offices out of state) to provide corporate welfare, and by denying labor its fair share of the pie based on increases in productivity (basically the old game was if labor increased productivity, wages would increase proportionately has disappeared and wages are being held down arbitrarily).
And here we are stuck in a depressed economy with interest rates either zero or negative (they are negative when returns are less than inflation) and government stimulus off of the table. Additional government stimulus of the economy is off the table only due to Republican opposition, Republicans being adamantly against the only thing that can jump start the economy. Republicans are against any kind of welfare, well, except corporate welfare.
So, are you ready for my really big idea? Here it is . . . corporate stimulus!
Corporations could take half of their cash piles, maybe $1-1.5 trillion and use it to stimulate the economy. This could take the form of cash bonuses to their workers (not management). All of these companies seem to revel in bonuses for management and seem to think they stimulate something good for their company, so how about bonuses for working stiffs? This would help return some of the earnings wrongfully denied labor to build up those piles of cash in the first place. It would also help repair the image of corporatists as being something other than cold hearted, blood sucking scum. And workers would spend that money and the people it went to would spend it again. (Go, Multiplier Effect, go!)
If the corporations involved have few employees and much to atone for, e.g. hedge funds, etc., maybe they could voluntarily fund a public work: a road or bridge repair project, a high speed rail study, etc. A billion here and a billion there and soon there would be people working and spending the money thus earned, stimulating the economy.
Don’t like corporate welfare? How about corporate stimulus? Come on corporations, you’ve got voting rights now, how about stepping up and showing you are good citizens.