The U.S. economy is still in a huge crater. It got into that crater due to the contradictions of an inherently unstable & unjust system colliding with each other — in particular, the contradiction of consumerism as primary engine of growth, financed by debt due to a neutered labor market, butting up against the collapse of places for that debt to go thanks to our banker overlords betting it all on the financial equivalent of the Buffalo Bills winning a Superbowl. Paul Krugman points at one factor of this, via the following chart:
…and then basically says “if the public can’t spend, the government MUST”, throwing all skeptics of the concept of politically guided demand together as “liquidationists”, regardless of their argument. Krugman being a big name mainstream pundit for a big name media company, he naturally thinks of any opposition as consisting entirely of right-wing Republicans. Funny thing is, right-wing Republicans don’t actually disagree with him; the slightest glance at their record shows they love them some Keynesian economics as long as the spending goes to the right things, by which they mean war & its related pork. Their public stance is purely P.R. stunt, as when the current system is obviously one of rampant conflation it’s easy to score points by claiming allegiance to market order. That they in fact don’t is irrelevant, the image is what matters.
My own view is that what we’re witnessing is a slow motion systemic death, which necessitates building something to replace it with. This being a radical conclusion that leads to such messy things as a mass of people squatting in their own homes, a return to wildcat strikes, and an overall declaration by the public to the financial sector of “you get your money through state corruption; your argument is invalid”, I don’t expect Krugman to embrace it. He still believes, like a child finding those shiny quarters under his pillow the morning after losing some baby teeth, that the power of government to do a greater good is real. Yet, this opens another possibility to him which he glances at without stating the obvious:
Yes, corporations are sitting on lots of cash — but why should they expand capacity when weak consumer demand means they aren’t using the capacity they have?
Paul, you believe in goosing demand via government action. Corporate status is a creature of government. You state that they’re sitting on lots of cash. Much of the public currently lacks cash. You might as well come out and say “just fucking take it”. If you don’t because you think they should keep it, then your complaint about the cash is pointless. If you don’t because you see it as politically impossible…well then, what’s that say about your chosen tool?