Sunday, September 19, 2010

Companies Still Hoarding Tons of Cash

Companies are spending money but not on employment. Companies are using there money for new software and equipment but not on more labor. The recession caused companies to make cutbacks and the unnecessary labor workers were the first to go. Companies have not started to hire more workers probably because they do not find it efficient anymore to keep so many workers. If companies are able to remain productive with less workers than that is what a capitalist will do. A capitalist does not hire workers in order to help the economy reach a equilibrium. American is one of the most capitalistic countries in the world and if companies can find ways to be more productive with software or better equipment then that is what is going to happen.

1 comment:

Tanvi Devidayal said...

But why invest so heavily when demand from the households is not increasing? If companies do not spend on hiring, people will not having the money to spend on the output produced and so what is the point in investing so much?