Doug Saunders in the Globe and Mail:
Canadian companies have piled up more than $525-billion in cash reserves - almost a third the size of the entire economy - up from little more than $150-billion a decade earlier. According to a recent analysis by the Gandalf Group, at least 45 per cent of Canada's biggest companies are hoarding cash rather than investing in employment or capital.
None of it is going into research and development, expansion of market share, new offices and factories or, crucially, on employing people. Nor is it going into tax revenues, since cash reserves - and some of the earnings that contribute to them - escape the taxman, giving companies an incentive to not invest.
There's lots of money around. But as long as it's being hoarded — and those who are hoarding continue to accumulate a disproportionate share — the austerity agenda won't get the economy moving again. Neither will Tim Hudak's right-to-work labour agenda nor much else. Those measures don't address the problem: at this point governments are cutting taxes and streamlining regulations to benefit the very people who are hoovering up cash and sitting on it.
Want to improve the economy? Get a bunch of that money into the hands of the people most likely to spend it. Wherever they spend is where demand will increase and prompt the private sector to increase capacity to meet the demand. If the system works as advertised one of the byproducts of that expansion will be jobs. No messy tax credit programs. No "picking winners." No flashy economic development projects that create bureaucracies and photo ops for politicians. Everybody wins! Free markets!