Krugman: Businesses Are Making More Money than They Know What To Do With

HAYES There is two ░░░░░░░░ of recovery that I ░░░░░░░░ inaudible and particularly difficult ░░░░░░░░ work out why it ░░░░░░░░ happening What is this ░░░░░░░░ hoarding You have March ░░░░░░░░ corporate cash flow and ░░░░░░░░ investments are about both ░░░░░░░░ billion each By March ░░░░░░░░ corporate cash flow is ░░░░░░░░ 1 2 trillion Capital ░░░░░░░░ are around 1 trillion ░░░░░░░░ overall corporations have about ░░░░░░░░ 9 trillion sitting on ░░░░░░░░ balance sheets Apple recently ░░░░░░░░ this bizarre kind of ░░░░░░░░ of having too much ░░░░░░░░ where their shareholders were ░░░░░░░░ them You have all ░░░░░░░░ cash what is the ░░░░░░░░ We don t even ░░░░░░░░ how to price this ░░░░░░░░ a certain window of ░░░░░░░░ Why is there so ░░░░░░░░ money sitting on the ░░░░░░░░ KRUGMAN Okay So we ░░░░░░░░ t actually know the ░░░░░░░░ One thing that is ░░░░░░░░ is if you think ░░░░░░░░ s because companies are ░░░░░░░░ to invest That doesn ░░░░░░░░ really fit the facts ░░░░░░░░ investments corporate investments is ░░░░░░░░ as strong as it ░░░░░░░░ the peak of the ░░░░░░░░ boom It certainly is ░░░░░░░░ as strong it was ░░░░░░░░ the Clinton years but ░░░░░░░░ s not that weak ░░░░░░░░ It s more or ░░░░░░░░ so corporate investing or ░░░░░░░░ seem to earn vast ░░░░░░░░ of profits and they ░░░░░░░░ t seem to want ░░░░░░░░ invest it Is that ░░░░░░░░ because demand isn t ░░░░░░░░ there or also they ░░░░░░░░ seem to be sitting ░░░░░░░░ the stuff But you ░░░░░░░░ back in the early ░░░░░░░░ of the last decade ░░░░░░░░ Bernanke gave a speech ░░░░░░░░ the global savings glut ░░░░░░░░ unfortunately he was saying ░░░░░░░░ to worry about the ░░░░░░░░ S housing bubble But ░░░░░░░░ point is right There ░░░░░░░░ a global savings glut ░░░░░░░░ a lot of it ░░░░░░░░ corporations that are saving ░░░░░░░░ s a lot of ░░░░░░░░ earnings just sitting there ░░░░░░░░ quite sure why Maybe ░░░░░░░░ are just making so ░░░░░░░░ money they don t ░░░░░░░░ what to do with ░░░░░░░░ HAYES Well that brings ░░░░░░░░ to this profits mystery ░░░░░░░░ is corporate profits hitting ░░░░░░░░ new high of 10 ░░░░░░░░ GDP in 2012 Employee ░░░░░░░░ fell to a low ░░░░░░░░ 43 5 of GDP ░░░░░░░░ 2012 And this is ░░░░░░░░ of the stories of ░░░░░░░░ that I think is ░░░░░░░░ the most worrisome Aside ░░░░░░░░ the sluggishness and the ░░░░░░░░ Unlike Europe we have ░░░░░░░░ growth We re in ░░░░░░░░ recovery But there is ░░░░░░░░ tremendous yawning chasm opening ░░░░░░░░ between profits and wages ░░░░░░░░ it just seems to ░░░░░░░░ that how long is ░░░░░░░░ sustainable There s a ░░░░░░░░ point right In a ░░░░░░░░ based economy the profits ░░░░░░░░ coming from selling things ░░░░░░░░ people And people don ░░░░░░░░ have money from wages ░░░░░░░░ they don t have ░░░░░░░░ from huge amounts of ░░░░░░░░ Where is that money ░░░░░░░░ why are we projecting ░░░░░░░░ profits so far KRUGMAN ░░░░░░░░ it s interesting I ░░░░░░░░ there is a point ░░░░░░░░ view Some economists will ░░░░░░░░ you that the corporations ░░░░░░░░ a veil And all ░░░░░░░░ profits are accrued to ░░░░░░░░ so investors must know ░░░░░░░░ the money is there ░░░░░░░░ so they are going ░░░░░░░░ spend But financially real ░░░░░░░░ isn t like that ░░░░░░░░ does look like a ░░░░░░░░ sinkhole for purchasing power ░░░░░░░░ are accumulating These profit ░░░░░░░░ are relatively new We ░░░░░░░░ inaudible inequality since about ░░░░░░░░ But until about the ░░░░░░░░ 2000 it was all ░░░░░░░░ earners I mean hedgefund ░░░░░░░░ it was people who ░░░░░░░░ way or the other ░░░░░░░░ a paycheck Since 2000 ░░░░░░░░ s been a redistribution ░░░░░░░░ labor of all kinds ░░░░░░░░ corporate profits We don ░░░░░░░░ know what it s ░░░░░░░░ It might be technology ░░░░░░░░ might be the rise ░░░░░░░░ robots It might be ░░░░░░░░ increase in monopoly power ░░░░░░░░ combination of the two ░░░░░░░░ it suddenly has become ░░░░░░░░ s almost as big ░░░░░░░░ deal as the great ░░░░░░░░ itself And it really ░░░░░░░░ everything and not in ░░░░░░░░ good way HAYES How ░░░░░░░░ we think about what ░░░░░░░░ do about it KRUGMAN ░░░░░░░░ one answer is a ░░░░░░░░ of what businesses are ░░░░░░░░ for let s cut ░░░░░░░░ profits taxes Cut corporate ░░░░░░░░ maybe not maybe we ░░░░░░░░ be raising them again ░░░░░░░░ it s a big ░░░░░░░░ of our problems We ░░░░░░░░ to start thinking about ░░░░░░░░ for essential programs in ░░░░░░░░ by taxing capital income ░░░░░░░░ by the way a ░░░░░░░░ bit of ObamaCare is ░░░░░░░░ for by a special ░░░░░░░░ on investment income which ░░░░░░░░ a good thing but ░░░░░░░░ re going to need ░░░░░░░░ of that But we ░░░░░░░░ also want to think ░░░░░░░░ this is market power ░░░░░░░░ about revitalizing anti trust ░░░░░░░░ That sort of went ░░░░░░░░ in the 80 s ░░░░░░░░ that is probably a ░░░░░░░░ mistake that we are ░░░░░░░░ to pay for now.”