The Decline of the American Empire of the Sun U.S. corporations are highly profitable and flush with cash. At last count (Z,1 Release) , U.S. nonfinancial corporations had nearly $16 trillion in financial assets on their balance sheets, almost as much as they have in tangible assets. The gap between internal funds available for investment and actual capital expenditures—what’s called free cash flow—is very wide at around 2% of GDP. That’s down from the high of 3% set a couple of years ago, but still higher than at any point before 2005. Instead of investing—and remember, profitability is quite high—corporations are shoveling cash out to their shareholders. Through takeovers, buybacks, and traditional dividends, nonfinancial corporations are transferring an amount equal to 5% of GDP to their shareholders these days—again, down some from recent highs, but very high by historical standards. This reflects the victory of the shareholder revolution, a crucial component of the neoliberal era of the last three decades, which established the fact that making shareholders happy is the principal reason for a public corporation’s existence. And that happiness is measured over the very short term: more money, now. The future, well, we can worry about that some other time. Alfred Marshall famously defined interest as the reward for waiting, but American capital has lost all patience (not that interest rates these days offer much of a reward). jacobinmag/2013/09/the-decline-of-the-american-empire/
Posted on: Sun, 01 Dec 2013 05:22:25 +0000