Billions for Acquisitions, Nothing for US Workers

When
PBS' corporate-friendly Nightly Business Report (NBR) airs a story at
the top of its newscast about a major blockage in the corporate
'trickle-down' pipe, you know the jig is up.

On August 30th, NBR did just that.

In
her setup to this fascinating little segment, NBR host Susie Gharib
opened with the words: "Well, American companies are sitting on a pile
of cash. But they're not using it for hiring. They are using the money
for deal-making."

The
story that followed pretty much confirmed what most Americans have
suspected all along: So-called 'trickle-down' economics never did work
as advertised. And when it comes to spreading the wealth, corporate
trickle down is turning out to be a very bad joke -- one that American
workers don't find very funny.

Introducing
her story, NBR correspondent Erika Miller announced: "Consumers are not
the only ones holding on tightly to their cash these days. Corporations
are too ... Non-financial companies in the Standard & Poor's 500 have
a record $837 billion in cash in their coffers."

"That's enough to pay 2.8 million workers -- basically, the entire population of Chicago -- $100,000 a year for three years."

"But,"
added Miller, "one of the few places companies are spending money is on
is on mergers and acquisitions. With one day left, August already has
the highest value of global M&A deals this year."

Notably,
only days before the NBR story was aired, Thomson Reuters had released a
study revealing that a whopping $200 billion worth of corporate
deal-making took place in the month of August alone - that's $200
billion in mergers and acquisitions (known as M&A's in corporate
circles). The study was followed by an August 27th
Reuters report sporting the following headline: "August's $200-billion
in takeover announcements is unlikely to provide enough of a spark to
energize equity markets fretting about another dip in global growth."

Yet,
while Reuters waxed anxious about "energizing equity markets," their
concern with record US unemployment seemed oddly limited -- to the
problems those unemployment numbers posed for investors.

"The
steady flow of bleak data on the US jobs market and consumer spending
on both sides of the Atlantic over the past few weeks has been at the
heart of investors' worries, and the prospect of an M&A tide is
adding to fears over jobs," wrote Reuters.

What
the news agency didn't mention was anything about how far the billions
spent on M&As might have gone toward "putting America back to work."

So much for corporate America's professed commitment to that worthy goal.

Damn the workers, full speed ahead

By now, anyone familiar with 21st
century 'corporatese,' understands that when corporate news agencies
refer to "the economy," they are actually talking about corporate
profits - jobs or no jobs.

So,
when NBR's Erika Miller observes that corporate mergers often lead to
layoffs, and hastens to add that Americans "may take some comfort in
knowing that a flurry of deal-making is often a positive sign about the
outlook for the economy," we know what she means.

These
corporate elites don't give a damn about unemployment numbers. Well,
they care, but only insofar as those numbers impact their bottom line.
Which explains why, on August 20th,
despite an anticipated loss of another 100,000 jobs in August, Public
Radio's Alisa Roth glibly observed on MarketPlace: "A lot of companies
have saved so much money, they can pay cash [for their acquisitions]. And it's cash they don't necessarily know what else to do with."

"When
the stock market's valuation is low," added MarketPlace guest and
equity analyst Brad Hintz, "it's actually cheaper to go out and buy
whole companies ... than it is to go out and hire workers and invest in
new plants and equipment."

Trickle down was (and still is) DOA - can we please admit it now?

Back
in 2001, economist Thomas Sowell wrote in Capitalism Magazine: "There
has never been any school of economists who believed in a trickle down
theory. No such theory can be found in even the most voluminous and
learned books on the history of economics. It is a straw man."

Sowell's words were never more true than they are today.

Oh, and by the way, NBR wrapped up its 'corporate hoarding' segment with this intriguingly 'corporatesque' outro:

Scott
Wren (Wells Fargo Equity Strategist): "Right now people are hesitant to
hire because they're able to pick up companies, do it quicker, build
their business quicker, at least in a strategic sense, without having to
hire new people in, without having to train those people, without
having all of the up-front costs that it takes to really organically
grow the business you're in."

Erika
Miller: "So what will it take to get firms to abandon their
cash-hoarding mentality and start hiring again? Experts say businesses
need to see a strong recovery in consumer demand.

"And that's not expected as long as the job market remains weak."