This is what the "job creators" are up to.

Hoarding money and firing people.

When Pfizer cut its research budget this year and laid off 1,100 employees, it was not because the company needed to save money.

In fact, the drug maker had so much cash left over, it decided to buy back an additional $5 billion worth of stock on top of the $4 billion already earmarked for repurchases in 2011 and beyond.

The moves, announced on the same day, might seem at odds with each other, but they represent an increasingly common pattern among American corporations, which are sitting on record amounts of cash but insist that growth opportunities are hard to find.

The result is that at a time when the nation is looking for ways to battle unemployment, big companies are creating fewer jobs, and critics say they are neglecting to lay the foundation for future growth by expanding into new businesses or building new plants.



One response to “This is what the "job creators" are up to.

  1. The economy has a demand problem due to widespread over-leveraging. Companies facing reduced long-term demand downsize and liquidate unnecessary assets to cash — perfectly predictable behavior for entities who can be expected to maximize profits. That cash, by the way, is not a bankroll for displaced employees — that’s what unemployment insurance is for. The cash is the property of stockholders.

    It’s not a matter of when companies will decide to start hiring and investing capital in direct support of their businesses again. That’s the easy part: They’ll do it when that’s the most profitable thing to do.

    The question, then, is “When will it be profitable to take those risks again?”

    Now, I don’t know what government can do to truly spur demand. But I do know that with less demand it makes sense to minimize policies that discourage risk-taking, so that scarce opportunities to increase profits once again become risks worth taking.

    And you’re not going to get that as long as it’s politically incorrect to make a profit.

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