January 30, 2013

Chart of the Decade: Corporations are Pessimistic About Future Growth

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Ezra Klein posted this chart today showing the steady accumulation of corporate cash and reserves over the past 15 years. I’d like to nominate it for chart of the decade or something. “Why corporations are holding so much more cash is an interesting mystery,” says Ezra, but I think it’s the key mystery of the past couple of decades. Total liquid assets held by nonfinancial corporations have increased from 7.7 percent of GDP to 11.3 percent of GDP.

Why? Why are corporations increasingly unable to find anything interesting to do with their cash in the real world? Why are they implicitly so pessimistic about opportunities for future growth? Is this the financial smoking gun for Tyler Cowen’s “great stagnation” thesis?

I’m not sure. But for 15 years the people with money to bet have been betting that they’ll get better returns investing in financial instruments than they will by investing in expansion of existing products and the invention of new ones. Until we figure out why, we’re going to be stuck with a combination of sluggish growth and financial bubbles as far as the eye can see.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

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