Why we shouldn't get our economics from The Guardian

One of their long form pieces:

Consider the financial engineering done by such firms. Like most of the largest and most profitable multinational companies, Apple has loads of cash – around $210bn at last count – as well as plenty of debt (close to $110bn). That is because – like nearly every other large, rich company – it has parked most of its spare cash in offshore bond portfolios over the past 10 years. This is part of a Kafkaesque financial shell game that has played out since the 2008 financial crisis. Back then, interest rates were lowered and central bankers flooded the economy with easy money to try to engineer a recovery. But the main beneficiaries were large companies, which issued lots of cheap debt, and used it to buy back their own shares and pay out dividends, which bolstered corporate share prices and investors, but not the real economy. The Trump corporate tax cuts added fuel to this fire. Apple, for example, was responsible for about a quarter of the $407bn in buy-backs announced in the six months or so after Trump’s tax law was passed in December 2017 – the biggest corporate tax cut in US history.

Trumps tax reforms were the solution to this particular point. In the past foreign profits that remained in foreign territories were not taxed in the US. Therefore foreign profits were treated to a tan and a rum punch on some Caribbean island. They were then used as the collateral (in a way, even if not directly) for within the US borrowings which could then be used to pay dividends, buy back stock.

The Trump tax reforms now tax those foreign profits whether they are repatriated or not. Therefore there is no point in not repatriating them so they are repatriated. It’s not necessary to borrow against them, instead they can just be paid out to shareholders.

That is, that tax reform being complained of is the solution to the very problem being complained of. We really shouldn’t be getting our economics from The Guardian. For of course it gets worse:

That is the final trend worth considering. Technology firms drive down the prices of lots of things, and tech-related deflation is a big part of what has kept interest rates so low for so long; it has not only constrained prices, but wages, too.

If we’ve got deflation in goods and services then real wages are, of course, rising, not being constrained. Managing to get the sign wrong is pretty good, don’t you think?

Really, look elsewhere than The Guardian for economics.