Making capital pay for
the GND
Doug Henwood
Christian Parenti has an
excellent piece up at Jacobin arguing that Corporate America
could pay for a lot of the Green New Deal. They’re rolling in cash, and through
a combination of regulation, taxation, coercion, and incentives, all that
surplus capital could be steered into environmentally beneficial investment. I
endorse this completely. I’m just here to underscore how much cash they have
and show what they’re now doing with it.
According to the latest
edition of the Federal Reserve’s financial
accounts*, as of the end of 2018, nonfinancial corporations had $4.4
trillion in cash and other liquid assets (meaning they could quickly be turned
into cash). And that doesn’t include unincorporated businesses, which have
another $1.6 trillion on hand. (I’m leaving out financial firms, since a lot of
what they hold is other people’s money.)
But that’s not all. Businesses
are making far more in profits than they know what to do with. They do invest
and hire, but they’ve also been shoveling vast pots of cash into the pockets of
shareholders. They do this through several routes—traditional dividends, buying
back their own stock to boost its price (which not only makes shareholders
happy, it also makes top executives smile, since they typically own lots of
stock in their employer), and taking each other over. (Stock buybacks were
essentially illegal before 1982; they could be made illegal again.) Put all
those together into something you could call transfers to shareholders, and you
get some really staggering numbers. Between 2012 and 2018, firms paid their
shareholders a total of almost $6 trillion dollars. Since 2000, the total is
$14 trillion. Both totals are equal to about half what they spent on investment
in real things like plant and equipment over those periods.
In other words, they’ve got
plenty of money to spend on building a green infrastructure. Of course, they
don’t want to, and even if forced, they’d do everything they could to avoid
complying. But one thing they can’t do is plead poverty.
* The more familiar national
income and product accounts (NIPAs), the source of GDP and related data, cover
production of goods and services and incomes earned in production (like wages
and profits). You might think of them as an accounting of the “real” economy,
though there’s no shortage of unreality under the regime of capitalist
production. The NIPAs do not cover purely financial things like assets and
debts. That’s what the financial accounts, formerly known as the flow of funds,
do. The figures in this post come mainly from tables B.103 (balance sheets of
nonfinancial corporate business) and F.103 (flows of nonfinancial corporate
business).
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