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Michael Hiltzik: Employment and the prisoners' dilemma

August 24, 2010 |  3:32 pm

The writer Dorothy Parker, challenged to use the word "horticulture" in a sentence, is said to have responded, "You can lead a horticulture, but you can't make her think."

That line came back to me as I contemplated the foolish and shortsighted resistance of American corporations to spending their swelling cash hoards on hiring, training and compensating workers -- the topic of my Wednesday column.

The disconnect in Corporate America between the recognition that the American economy is consumer-driven and the recognition that people without jobs or without a living wage can't consume now seems complete.

Business leaders say they can't hire until they begin to see consumer demand, but they don't seem to understand that demand is generated by rising and secure employment. It's as if the entire economy is afflicted with the prisoners' dilemma, in which every player acts only for his or her immediate welfare, not realizing that only by mutually supportive action can any of them survive.

A good first step would be for all the companies that cut or eliminated their 401(k) matches during the recession to restore them, now. Workers concerned that they may not have enough to sustain them in retirement will stop spending now in order to shore up their retirement accounts. The harvest: lower consumer demand today.

In that vein, it would also help if Republican and conservative ideologues, and uninformed Democrats, stop claiming that Social Security is "broke" or otherwise in fiscal trouble. It's not, but every public statement undermining confidence in the program will just provoke more people into cutting back today to be prepared for a future they're being trained to fear.

The column begins below.

Corporate America must be in a bad way. Job growth has stagnated, the prospects for hiring, at least in the near term, seem grim, and the polls of top executives sound universally glum.

And yet, operating earnings of companies in the Standard & Poor’s 500 index jumped 38.4% in the second quarter compared with a year earlier, according to Thomson Reuters, and companies are sitting on an estimated $1.8 trillion in cash -- by some measures, a record mound of cash.

Somebody’s making money in this economy. Unfortunately, it’s not the middle class or the working class. And that’s our real problem.

Read the whole column.

-- Michael Hiltzik

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