Summary: Many large corporations in pharma, auto, tech are becoming net savers in order to (1) avoid the taxes associated with purchasing and maintaining new as

Summary: Many large corporations in pharma, auto, tech are becoming net savers in order to (1) avoid the taxes associated with purchasing and maintaining new assets; (2) have a warchest of cash for M&A activity as cash deals are generally much cheaper than equity/debt deals, and M&A can be more cost-effective than R&D if done correctly. Author is unconvinced that this covers the whole picture, and offers this meta-explanation: Through the 20th century, as we shifted from a horse-and-sun-powered agrarian economy to an electricity-and-motor-powered industrial economy to a silicon-based information economy, it was clear that every company had to invest in the new thing that was coming. Simplified: there isn't enough promising new tech out there to soak up all of the cash in circulation. This is a common theme that has economists asking: what will be the 4th industrial revolution, and when will we see it? [1] Is the cash hoarding good or bad? Author thinks good: If corporate leaders and their investors truly believed that the future were bleak, that innovation and economic growth were irreparably slowing, there would be little reason to hold on to all that cash. AKA that we are on the cusp of a new wave of innovation. Personally I don't believe this matches up with leading business cycle indicators, such as the stock market, employment rates, and trends federal spending as a percentage of GDP. [2] But what do I know - there could be an R&D lab somewhere out there that is tantalizingly close to bringing the next paradigm-shifting technology to market. I'd love to know what that could be. [1] http://www.nber.org/papers/w18315.pdf http://www.nber.org/papers/w18315.pdf [2] http://www.usgovernmentspending.com/recent_spending http://www.usgovernmentspending.com/recent_spending