If you read President Obama’s speech to the Chamber of Commerce yesterday, you do see that he approaches them on his terms, with a call for them to basically support the agenda he’s put forward all along. He did stress that the benefits of a growing economy cannot aggregate at the top, with inequality rising. He challenged the assembled to invest in the people of America, who will reward them with eventual higher profits. He defended regulations that actually result in higher profits by spurring experimentation and greater efficiency.

As a speech, then, it was mostly fine. But he might as well have been talking to a brick wall. This was basically the same “we’re all in it together” speech that Obama has been giving since 2004, only this time, the audience doesn’t share that belief. They do not think they’re in it together, they think they’re in it for themselves, and if their corporations can simply build in emerging markets where they can essentially dictate the rules and regulations and make more money with less overhead, I see no reason why they’d drop that strategy.

Mr. Obama’s suggestion that businesses can help the economy recover by spending their reserves was met with skepticism by some in the audience. Harold Jackson, a executive at Buffalo Supply Inc., a medical supply company, called it naïve.

“Any business person has to look at the demand to their company for their product and services, and make hiring decisions,” Mr. Jackson said. “I think it’s a little outside the bounds to suggest that if we hire people we don’t need, there will be more demand.”

A perfect example from today. Corporations are sitting on $2 trillion in cash. They keep saying they’re waiting for increased demand before going ahead with any new investments. But actually, that’s not true. They’re making investments, in equity buy-backs that enrich their own bottom lines.

US companies have announced share buy-backs at the fastest pace since the fall of Lehman Brothers as companies search for ways to put their record cash holdings to work in a still nascent economic recovery.

Buy-backs announced by 24 US groups were $27.3bn last week, topping $26.5bn the previous week and the most in any week since September 2008, according to figures compiled by TrimTabs Investment Research […]

Buy-backs are typically rewarded by shareholders, as they reduce the outstanding float of a company’s shares, which has the effect of raising companies’ diluted earnings-per-share.

However, they worry economists, as it suggests that companies are not seeing expansion or acquisition opportunities.

“If the appropriate M&A opportunities cannot be pursued, buy-backs might be the only option to deliver EPS growth in a tepid economy,” said Carsten Stendevad, a corporate finance analyst at Citigroup in New York, in a recent report.

The growth comes directly from expanding share prices, and has nothing whatsoever to do with American workers. That’s just not the main focus of corporate America. They can make plenty of money overseas with a much higher yield per labor cost. They are interested in talking about US demand, which still has a ways to go and is getting eroded by US fiscal policy every day, as an excuse to delay investments in America that could go abroad or to themselves.

We have a new paradigm and people had better try and figure it out. Corporations aren’t going to create one more job in America than they need. They certainly won’t do it after some pleading, no matter who delivers the message.

David Dayen

David Dayen