Labor & Economy
Apple’s Borrowing Creates Dividends, Not Jobs
The Fed’s policy of keeping interest rates near zero is another form of trickle-down economics.
For evidence, look no further than Apple’s decision to borrow a whopping $17 billion and turn it over to its investors in the form of dividends and stock buy-backs.
Apple is already sitting on $145 billion. But with interest rates so low, it’s cheaper to borrow. This also lets Apple avoid U.S. taxes on its cash hoard socked away overseas where taxes are lower.
Other big companies are doing much the same on a smaller scale.
Who gains from all this? The richest 10 percent of Americans who own 90 percent of all shares of stock.
But little or nothing is trickling down. The average American can’t borrow at nearly the low rates Apple or any other big company can. Most Americans no longer have a credit rating that allows them to borrow much of anything.
It would be one thing if Apple and other giant companies were borrowing in order to expand operations and create new jobs. But that’s not what’s going on. Apple, remember, is still sitting on $145 billion.
The reason big companies aren’t creating more jobs is consumers aren’t buying enough to justify the expansion. And government is cutting back on spending.
Big corporations are borrowing simply in order to push stock prices up and reward their investors.
It’s a sump pump with the Fed on one end buying up bonds to keep interest rates low, and shareholders on the other end raking in the returns.
Get it? Easy money from the Fed can’t get the economy out of first gear when the rest of government is in reverse.
Trickle-down economics is the first cousin of austerity economics. Austerity is nuts when so many millions are out of work. And as we’ve learned before, trickle-down is a fraud. Nothing ever trickles down.
(Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Reposted from his Web site with permission.)
-
Class WarMarch 8, 2024
‘This Is Our Watch Now:’ The Pastor Guiding Conservatives to Southern California School Boards
-
State of InequalityMarch 21, 2024
Nurses Union Says State Watchdog Does Not Adequately Investigate Staffing Crisis
-
The Heat 2024February 27, 2024
Record Heat, Rising Sea Levels: The Stakes for the Climate Couldn’t Be Higher in 2024 Elections
-
Dirty Money: U.S. Banks and the Climate CrisisMarch 11, 2024
Many of the U.S. Banks Funding Coal Have an Unusual Carve-Out
-
Latest NewsMarch 22, 2024
In Georgia, a Basic Income Program’s Success With Black Women Adds to Growing National Interest
-
The SlickFebruary 28, 2024
Proposed Drilling Near Suburban Denver Superfund Site Raising Flags
-
Class WarMarch 12, 2024
Power of the Pulpit: How Conservative Congregations Scale the Church-State Wall to Political Victory
-
Striking BackMarch 25, 2024
Unionizing Planned Parenthood