Fisher Investments Editorial Staff
US Economy, Capitalism, GDP

The Many Gifts of Capitalism

By, 12/24/2010
Story Highlights:
  • US corporations have given many gifts during 2010.
  • The gifts given, like the global economy, are intertwined and connected.
  • These gifts are driven by the profit motive—frequently besmirched, but the most effective force in the world for innovation and change to improve folks' lives.


With the holiday season upon us, there's plenty to be thankful for this year. Celebrating family, friends, and sharing good tidings with strangers are what make this time of year unique. Call us econo-nerds, but we at MarketMinder would like to take this opportunity to say thanks to corporate America for all their gifts given this year.

US corporations may not slide down the chimney Friday night or devour cookies left by hopeful children, but they've given aplenty all year long. Here are twelve important, interconnected gifts Americans have unwrapped in 2010:

Gift #1: Enhanced productivity. During the recent recession, companies slashed costs and very effectively did more with less—driving vast productivity gains. In fact, the US ranked first globally in productivity growth in 2009.

Gift #2: Record corporate profits. Driven initially by productivity gains and later by rebounding revenue, US corporations have had a stellar year. Why is this a gift? Leave aside the positive implications for investors, and consider that profitable businesses are healthy—hire more, innovate more, and a bevy of other pluses.

Gift #3: Increased corporate cash balances. This is the direct result of the first two gifts. Now, this isn't a gift in itself—but it's an important precursor to the next gift.

Gift #4: Increased business spending, which has occurred in each of 2010's three quarters to date.

Gift #5: Expansion plans, technology upgrades, and hiring—essentially, what businesses are spending money on these days.

Gift #6: Employment gains. Resulting from these expansion plans, private businesses have added jobs in every month of 2010 to date. It will take time to return to pre-recession employment levels, but 2010 has shown the way forward.

Gift #7: Increased personal incomes. Personal incomes have also risen in 2010—largely due to the aforementioned drivers.

Gift #8: Better consumer discretionary sales resulting from this increased income.

Gift #9: Better overall economic conditions. On a nominal basis, the private sector gains noted above have driven GDP to new highs, recouping 2008-2009's contraction. Real GDP is only a shade away from an all-time high as of Q3 2010.

Gift #10: Improved investor sentiment. As conditions have improved generally, doom-and-gloom sentiment has become less dire.

Gift #11: More profits for corporations, leading to the greatest gift of all:

Gift #12: More of all of the above is likely in the future.

Corporations are often besmirched with a greedy label—striving to do anything to earn a buck—but corporate America and its profit motives are critical to US economic health. And it's true—the gifts they're giving aren't entirely altruistic—there's a profit motive to be sure. But there is simply no efficient replacement for the gains corporations and businesses bring to society in the name of profits. While many of the gifts above are simply statistics, what they represent are healthy, successful companies with a very tangible effect on our lives.  Successful corporations create jobs, innovate, and provide new products that make our lives better—largely explaining why, in some corners, economics is referred to as the study of happiness. While we don't totally agree as money and products don't by themselves produce a happy holiday, they don't hurt either.

Like the aforementioned gifts, the global economy is a highly complex and evolving web of relationships. This holiday season, reflect for a moment on the relationship between corporations and individuals—and realize both sides ultimately profit from gains. That's the best gift of all in our view and one that actually does keep on giving.


*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.


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