[I]sn’t there something odd about the fact that businesses are making large profits and sitting on a lot of cash but aren’t spending that cash to expand capacity and employment?
And he answers, Of course not.
[W]hy should businesses expand when they’re not using the capacity they already have? The bursting of the housing bubble and the overhang of household debt have left consumer spending depressed and many businesses with more capacity than they need and no reason to add more.
Krugman's Q&A is performed in the honorable service of ridiculing the right's economic quackery about taxes and regulation as the cardinal restraints on business expansion and new hiring. Naturally, coming from the quackery factories of such riveting minds as Rick Perry's and Michele Bachmann's, this wholesale propaganda has convincingly flooded the shallow intellectual ponds of the GOP base and has more than a few independents under tides of delusional water, too.
This much we know, and Krugman is right to assail those Republican pols and their aiding and abetting "conservative policy intellectuals" who "are fixated on a view about what’s blocking job creation ... but bears no relationship to reality."
Yet it's not just Republican pols and conservative, ahem, intellectuals who are priming the pumps of mass delusion. To wit, I couldn't begin to count the number of progressive pols and fellow activists I've watched on cable shows, pounding the news desks in outrage about corporate America sitting idly on $2 trillion-plus, when it should be prying a crowbar into its overstuffed wallet to hire, hire, hire.
Hire whom? To do, exactly, what? As Krugman (routinely) acknowledges, "what stands out now is a surge in the number of businesses citing poor sales — which strongly suggests that lack of demand, not fear of government, is holding business back."
Corporate America and Western Christendom's new savior -- small business -- aren't charitable, fraternal, or patriotic organizations sweating out the spiritual welfare of our little Cities on the Hill. They are cold-blooded, bottom-line outfits who will hire new employees when and only when consumer demand dictates new hiring.
Hello? This is Econ 101. Hell, not even that. It's high-school "Introduction to Business"; it's middle-school "Primer on Logic," if there were such a thing, which there should be. And America's corporate fat cats, sitting high atop their mountainous $2 trillion in cash, are most assuredly laughing their corpulent but logical asses off at outraged progressives who demand they hire in the abject absence of demand.
The fundamental solution to unremitting economic sluggishness is, of course, government as the demander -- spender -- of last resort. But that's another Krugman column. In today's, I just wish he had at least mildly exposed the macroeconomic preposterousness of progressive outrage at corporate cash-hoarding, which is merely the microeconomic nature of the beast. Until the left rejects misplaced anger and diagnoses the problem properly, it's only abetting the right's silliness.