Why Business Does Not Invest

Are companies largely run by Baby Boomers the reason business is not investing right now? Tell us what you think. Here's the argument.

Baby Boomer CEOs are the problem. Aging Boomer CEOs are:

1.Risk averse.
They have piled up tons of money, savings, retirement funds. They don't want to risk their entire life savings so close to retirement.

2.Profit, not growth, oriented.
Again, close to retirement, with only a few years to go, why invest long term when there is no long term.

3.Clueless about the new economy.
Boomers are clueless about the new economy, just like they are clueless about Gen Y, the people who are creating the new economy.  No reason to invest in something you do not understand.

4.More likely to be in declining industries.
Boomers are more likely to be in declining industries, companies based on the Industrial Age, not the Internet Age.  These companies really do not have a future.

We could go on with related traits: they don't get social media, they are hierarchical decision makers, they are surrounded by other Boomers with similar perspectives and pre-retirement financial agendas, etc.

What do you think? Are Boomer CEOs to blame for companies sitting on $1.7 trillion rather than investing now?

Photo: More fall colors.

Comments

[Mom of Toddlers]

I guess Baby Boomer seems to be a bit insecure about anything.

[D. P. Lubic]

The generational factor could be at work, but I think a bigger problem is the lack of demand, or to put it another way, a lack of customers.

People who are out of work have no money to spend. The ones who do currently have jobs are worried about them, and are anticipating tough times, getting rid of debts and saving for a rainy day. That's a good thing, but in the meantime, they aren't spending money on cars or houses or other things. So, the business owners aren't spending money on hiring people or buying stuff because nobody is spending money, and many people aren't spending money because they have no jobs or are worried about the job they have, and because they aren't spending money, business has no customers and can't afford to hire or invest. . .

There was an interesting comment about this in the local paper here. A local writer said a tax cut for businesses wouldn't do any good at all. He said a business wouldn't spend money if there weren't customers for it to serve, and if it got a tax cut, the owners would just pocket the money as extra profits. And it's true, hiring people to just stand around because there are no customers to serve isn't a way to make money.

[Thom]

Some interesting logic. However, I would bet that a smart business person is still going to invest in a good deal. Maybe a bit slower, maybe requiring more data but they are still likely to invest in smart businesses.