Matt Yglesias seems to think the answer is yes:

When nominal interest rates on the safest forms of debt hit zero, extra savings can’t push rates any lower to spur new borrowing. They can’t, at least, unless the Federal Reserve is willing to take some risks rather than stick with its current policy of guaranteed mass unemployment as preferable to the risk of embarrassing itself by trying something new. That means that when extra cash ends up in an already stocked corporate treasury, it does just pile up pointlessly. The same thing happens when oil exporting countries recycle their earnings from higher gas prices into American sovereign debt. During this anomalous period of zero interest rates, corporate cash stockpiling really does hurt the broader economy. And Apple is far and away the king of the cash stockpile, representing fully 36 percent of the $179 billion increase in U.S. corporate cash that we’ve seen since 2009. In fact, in 2011 the non-Apple part of corporate America stopped stockpiling and reduced its cash holdings by $6 billion. This was, however, more than offset by Apple’s addition of $46 billion to its own stockpile.

In other words, every decision to buy an iPad rather than a sofa has been hurting the American economy. The $10 billion in share buybacks and $10 billion per year in dividends announced today is good news for the American economy.

This seems mostly wrong to me.  I certainly approve of the cash dispersion, as the principle-agent principal-agent problem suggests that highly successful corporations will be tempted to waste their cash hoards on boondoggle investments.  So it may be good for the economy.  But I don’t see how it does much for the zero bound problem.  At least I don’t see any first order effects.  If Apple saves less I’d expect the recipients of this money to increase their saving my an equal amount.  After all, if an Apple-owner wanted to get their money back they always could sell 2% of their stock each year, and increase consumption.  Perhaps dividends are slightly more liquid, but many people own mutual funds that automatically re-invest the dividends.  Those rich enough to own individual shares often have brokerage accounts where the dividends automatically spill into a money market mutual fund.  If at the end of the month you have a tiny bit more in the MMMF, and a tiny bit less in Apple stock, but the total of the all assets remains exactly at say, $857,000, are you really going to spend more on consumption?  I don’t see it.

That’s not to say Yglesias is completely wrong, anything that makes our economy more efficient will tend to slightly speed up the time when we exit the zero rate bound on interest rates.  I just don’t think the Keynesian “savings” framework is a useful way to think about the issue.

PS. I just returned home and will get to the old comments by tomorrow.

Tyler Cowen just posted the following (after our lunch at China Star):

Here in a short paragraph is my current take on where Ben Bernanke would differ from Scott.  As the shadow banking system was imploding in 2008, due to a downward revaluation of collateral, nominal gdp stabilization would have required that the Fed resort to the medium of currency printing on a very large scale.  Scott favors such a move.  Bernanke would worry that the collapse of (some) intermediation would mean you get most of the output losses anyway, while the printing of currency would create subsequent problems with management of expectations, relative sectoral shocks (currency is only a partial substitute for credit), and medium-term adjustment once the smoke has cleared, not to mention political relations with Congress and interest groups within the Fed system itself.  Therefore Bernanke didn’t want to do it, even though in principle he likes to see nominal gdp stabilized, and has written and said as such.

I did say something about printing currency, but I meant instead of excess reserves.  I actually think the most important thing would have been to institute an explicit NGDP target, LEVEL TARGETING.  Do that, and very little currency would need to have been printed.  Large monetary bases are a sign of failed tight money policies, not easy money.  When money is easy, the ratio of the base to GDP is low, as in Australia.

BTW,  Tyler is right about currency being an imperfect substitute for credit, if it weren’t then open market operations would be ineffective at the zero bound.  Because it’s an imperfect substitute, permanent OMOs with cash are a powerful tool for controlling NGDP.

We also talked a bit about China.  Tyler seems to think that China may face a major economic crisis, and end up getting stuck in a middle income trap.  I don’t agree.  However I predict that at some point in the future there will be a consensus in the blogosphere that Tyler was right.  But I think that consensus will itself be wrong, it will be just a bump in the road, like Korea 1998.  If and when it happens, however, it will seem like THE END OF THE WORLD.

Today Tyler linked to an Izabella Kaminska post in the FT, which contains two graphs.  The second one shows Chinese housing prices.  Here are my comments about that 2nd graph:

1.  I am pretty sure that Kaminska thinks this graph shows that the Chinese housing market has been highly unstable during recent years.

2.  I think 99% of readers would interpret the graph the way I assume Kaminska did. (I don’t know about Tyler.)

3.  The graph actually shows an amazingly stable Chinese housing market.  Chinese incomes are growing at double digit rates.  I’d expect years of 30% price appreciation and then 10% price depreciation.  Instead prices have been almost constantly increasing, but never by more than about 12%.  The biggest drops are about 2%.  If the graph was levels instead of rates of change, everyone would agree with me.  But it’s not, and graphs can be highly misleading.  Tyler calls his link “Facts about Chinese real estate.”  But what is a fact?  I tried to get into a debate with Byran Caplan on epistemology at lunch, but Tyler very wisely pushed us back toward social science, an area where debates are not necessarily 100% sterile.

PS.  I agree that the food at China Star is great.

I’ve been traveling so I don’t know if the blogosphere has been talking about this:

This week’s spectacular firing of Bo Xilai, a Communist Party “princeling” long seen destined for a seat in the country’s all-powerful Standing Committee of the Politburo, has delighted the country’s liberals.

The rise and fall of the controversial (and now former) boss of the southwestern city of Chongqing has shed rare light on the rampant factionalism within China’s Communist Party, an organization that usually manages to appear united to outside eyes. Mr. Bo was seen as a standard bearer of the country’s leftists, who praised him from his anti-mafia campaigns and his efforts to resurrect socialist culture.

This is the biggest political news out of China since 1989.  (Which means it’s the biggest political news in the world.)  Terms like ‘leftist’ and ‘liberal’ have different meanings in China, but on balance he had the potential to do more harm that good, by turning back the clock.  Before his ouster he was viewed as a possible future leader of China.  It looks like the liberals have the upper hand right now.  This makes it considerably less likely that China will end up stuck in a middle income trap (which I never viewed as particularly likely.)

I’m traveling, so I won’t have much time to address comments for a few more days.

My dad was born in 1921, so naturally he was fairly liberal.  I was born in 1955, and my politics were shaped by the 1970s.  So I became a right-winger.  Admittedly, I’m something of a right-wing liberal, but I’ve always been vaguely affiliated with the right.  When I read this recent post by Yglesias, I had a sudden feeling of deja vu:

I still think there’s a deeply problematic solipsism in most of this reporting. Apple makes lots of stuff that lots of Americans own and therefore it’s possible to make people feel a kind of psychic chain of guilt when they hear about bad conditions in the factories building the components. But this is a bit like the South By Southwest human hotspots problem, what Apple stands accused of is complicity in the misery of Chinese workers but its real crime often seems to be exposing our delicate western sensibilities to the misery.

You don’t read articles about working conditions in factories making socks destined for export to Kazakhstan, and you don’t read articles about working conditions on the rice farms that people eagerly leave to go toil in the sock factory. That rice and those socks are invisible to us and so too are the workers. What we need to see and hear about are bad conditions wherever they may be, not just the ones that provide the appealing news hook. When you read something bad about a Foxconn factory and then see that thousands of people line up for the chance of a job at one of them, that really ought to make you wonder. What were those guys doing the day before they decided to stand in line? How did that look? If you want to understand the depths of poverty that exist in the world, you can’t just look under the streetlamp.

Great stuff, and indeed this sort of critique of progressives is basically what made me a right-winger.  Liberals (in the American sense) seemed so illogical during the 1970s, so naive.  I suppose my younger readers are now shaking their heads in disbelief:  “Everyone knows the conservatives are the stupid party, and always have been.”  They’d point to global warming denial, creationism, irrational fears of hyperinflation, or claims that “the military isn’t that expensive,” and hence a good way to employ the youth of America.

Yes, I know all that, but everyone is shaped by what was happening when they were young.  I recall:

1.  Progressive hostility to the hard truths of cost/benefit analysis.

2.  Hysteria over chemicals in food, even though science didn’t back them up.

3.  Denial of the role of money in inflation and support for crack-pot solutions such as wage price controls (Yes, I know about Nixon, I’m talking intellectuals now.)

4.  Denial of the disincentive effects of welfare programs.

5.  Soft on communism.  By that I don’t mean pro-communist, I mean anti-anti-communist.  When I was young calling someone an “anti-communist” was basically an insult in liberal company.  If you called Mao or Castro a brutal tyrant you were viewed as an embarrassment; as something of a something of a McCarthyite.  Chilean economic policies were viewed as evil.  Now the Chilean socialists have adopted them.

6.  Denial that punishment deters crime.

And I could go on and on.  It seemed to me that liberals weren’t willing to engage in clear, hard-headed, logical thinking.

I can already anticipate all the push back I’ll get in the comment section.  I do realize than in any decade there are good and bad points to both sides.  Lots of them.  So I’m sure you can find many exceptions to my generalities.  I’m just giving you my gut impression, FWIW.

Some might argue that even if Yglesias was born in the 1950s he would have become a lefty.  That he has an especially compassionate heart.  I doubt that (recall that Breitbart tweet).  I think he is very well-intentioned, but so am I and the other right-wingers I know.   But he doesn’t strike me as someone with a typical progressive personality.  They don’t write posts as dispassionate as the one I just quoted (and I could cite other recent Yglesias posts in the “neoliberal” vein.)  Rather I think he affiliated with the left because he’s younger than me, and the left seemed the more rational worldview when he came of age.

PS.  I have a theory that everyone actually lives about one decade (or maybe 15 years); during the others they are just tourists passing through.  Coppola seemed incapable of making a non-masterpiece during the 1970s, and couldn’t click in any of the other decades.  For me 1970s pop stars like Elvis Costello and Graham Parker are towering figures; for 1960s or 1990s people, they’re just minor footnotes.  You had to be there to understand.

PPS.  Think the 70s were mindless disco?  Check out the lyrics to “Man out of Time.”

Suppose voters were given a direct say in government policy-making.  They could vote up or down on important tax and regulatory changes.  How would they vote?  It turns out that there is only one country that has anything close to a direct democracy.  The lessons it provides are a mixed bag for libertarians, but mostly positive.

One question that divides American progressives and libertarians is the supply-side effect of taxes.  Why do Europeans work less than Americans?  Is it because their tax rates are higher?  Does it reflect differing government regulations?  Or is it because their culture is different?  It may well be all three, but there is now some evidence that the lower worker hours in Europe do not represent a higher preference for leisure:

Voters in Switzerland have rejected a proposal to give themselves more annual leave in a national referendum.  . . .

Two-thirds of voters reportedly rejected an increase in the country’s minimum annual leave from four weeks to six, which would have brought it in line with most other West European countries.

But a proposal to construct what have locally been referred to as “sex boxes” for prostitutes got the green light from voters in Zurich.

The plan would see the creation of special parking spaces with walls between them where sex workers can ply their trade away from suburban areas in Switzerland’s biggest city.

I see two possible interpretations for this vote.  First, it may be the case that all Europeans prefer 4 weeks vacations, but other governments don’t give them the chance to vote on the issue.  (By analogy, many Europeans supported the death penalty when their governments abolished the practice.)  But my hunch is that a referendum on moving back from 6 to 4 weeks would fail in many Western European countries.  In my view a more plausible argument is that the Swiss vote reflects the lower income tax rates in Switzerland, as compared to other Western European countries.  Thus is a tax sense, Switzerland resembles the US more than France.  A third explanation might be cultural, but my gut instinct tells me that a 2 to 1 vote against 6 weeks of vacation represents more than cultural differences.  That’s a pretty overwhelming vote.

[As an aside, I anticipate many commenters putting way more weight on cultural factors than they actually deserve.  When US MTRs on the rich were very high in the 1950s, wives of well-paid men rarely worked.  When MTRs fell sharply between the 1960s and 1980s, wives of well-paid men became much more likely to work.  Just the opposite happened to the labor force participation rate of poorer women, as their implicit MTRs rose a lot between the 1950s and 1980s.  But the effect of MTRs seems “invisible” to most people, hence both liberals and conservatives are likely to see these changes in cultural terms.  Liberals see more well-educated women working as being the result of feminism, and conservatives see less poor women working as representing cultural regress away from Victorian values.  Also note that when French tax rates were similar to US rates in the 1960s, they worked similar hours.]

Back to Switzerland.  I see two positives for libertarianism and two negatives.  On the positive side, Swiss voters have produced a tax regime that is much more libertarian that those of other western European countries.  In addition, they tend to vote moderately libertarian on issues like prostitution, assisted suicide, drugs, etc.

On the negative side, Swiss voters do not seem to favor the ultra-low taxes that many libertarians would prefer.  And Switzerland has (I’m told) lots of petty regulations in areas such as real estate.  So it’s a mixed bag.  Still, the country seems to work pretty well, so if it’s not an overwhelming argument for libertarianism, it certainly presents a strong case for radical decentralization combined with direct democracy.  It also tends to refute the notion that America is far more unequal than Denmark because of our low tax regime.  Like all countries, Switzerland has some poverty.  But it certainly looks much more like Denmark than America, at least to the casual visitor.  There may be good arguments for turning the US into a progressive welfare state with Danish-style social welfare programs.  But we should be under no illusions that this would make America look anything like Denmark.  We’d still look like America, with all our “savage inequalities.”  And we’d become somewhat poorer.  Partly because Denmark is poorer than the US (or Switzerland), but partly because Denmark is in many ways more neo-liberal than the US.  Indeed it’s even more neoliberal than Switzerland, (according to the Heritage Foundation, if you look at economic freedom measures other than taxes and spending.)  Taxes matter, but free markets are also important.