2012-08-15 | Filed Under SteveG's Posts |
Below is an email I received from Rebuild The Dream. I find this spot on to almost everything I believe. I’ll share one little quibble below the text of the email.
Here is my one quibble that I promised above to mention.
But finding no jobs because big corporations are hoarding profits instead of hiring and Washington D.C. just doesn’t seem to care.
I would not use the pejorative phrase “hoarding profits” to describe what businesses are doing.
If you understand Keynesian economics, what the businesses are doing is best described as holding onto their profits and not investing them in more capacity while there is a shortage of demand from customers. This is about the only rational plan of action for a company that wants to stay in business for the long term and maximize the return to owners.
The rationality of this individual corporate behavior is exactly the reason that, in a depression, the central government has to make up for the missing demand from the private sector. People are both customers, employees, and owners and must protect their own interests. The government is the only entity that has a universal responsibility to all its citizens’ interests and the strength to take the risk of supplying the missing demand. It is essential to note that only governments that are sovereign in their own currency have the ability to take the correct action without the help of an external entity that does have control over the currency.