It is sad (to me) that your comment has kicked off such spirited reply discussion, and it's all of limited value in evaluating the point made by the Economist article.
It's just not true that cash on a balance sheet is idle. Corporate cash sits in bank accounts, and banks use balances to leverage their business. It feeds the banking system, and gets redeployed as debt rather than as equity.
And if there are economic opportunities waiting for equity, that just means it's cheaper to invest in which should attract more investment capital, even if it doesn't come from corporate balance sheets or banks: there are plenty of rich people and rich institutions looking for places to invest their cash (see below). You simply can't draw conclusions as you have done the way you are doing it.
But the Economist is making a good case for what they are saying. So let me try to translate it into terms that the average HNer can understand: what you all call "unicorns" (what you all strive to create) represent successful business models that are actually terrifically bad for competition, and therefore terrifically bad for the economy. We should not be rooting for them to succeed.
Bill Gates did not create the personal computer revolution, he didn't really foster it, he simply monopolized it, and inasmuch as he did, it was bad for the economy. Compare what happened in software to what happened in hardware: actual competition has wrung all the profits out of "IBM compatibles": that was a good thing for consumers and the economy.
That mantle has now passed to Apple (after Apple basically failed during the period of Microsoft hegemony). Again super premium prices supported by proprietary means. Do consumers benefit from Apple's closed ecosystem? No, not from the closed part. We benefit from Apple's positive feature contributions, but that doesn't mean we should be willingly allowing Apple to capture so much of the consumer surplus (the "good stuff" about a product, measured in dollars) using what are known to be anti-competitive tactics. Why should Apple own "network effects" of standards for music or software distribution?
[trigger warning, sexual assault metaphor] Now before all the Apple fanboys and libertarians join forces and start submitting replies to me about how morally right it is that Apple be allowed to economically rape consumers, consider simpler cases.
The Uber business is simple to grok. So is Ebay's, so is Paypal's, so is Facebook's, so is Twitter's. These businesses are based on what we used to call "protocols", stop worshipping the founders as if they did something more amazing than right place/right time. SMS is a protocol. So is HTTP. When companies don't "own" them in the sense of owning the customer, customers benefit. When companies are allowed to "own" them in the sense of owning customers, customers do not benefit anyhwere near as much as we all can.
Think back to caveman times: the first guy to invent the bow and arrow did something really cool. And he benefited from it, tremendously, by catching a lot more deer and eating better. Wasn't that enough? would it have been better if nobody could copy him without paying him a tribute?
Apple's profits from the app store, Amazon's ownership of one-click shopping (whether due to the patent or not) should be compared to Twitter's ownership of short message broadcasts: tweeting will no doubt be ruined as something fun/useful if Twitter successfully figures out a way to monetize, and Twitter itself will be ruined if they don't. But that dichotomy is a false one based on the idea that Twitter should own short message broadcast: it's a simple useful protocol, the value in it is the value people put into their tweets, not that somebody thought of it. Thank god nobody owned HTTP, so could you all stop rooting for somebody owning short message broadcast? Fuck unicorns, they suck. Sure, Twitter thought of it first. So what? It wasn't much to think of. Same with Paypal. Sure they put in a lot of work, after thinking of a fairly basic idea. Did they make something great? Do you use Paypal routinely to exchange small amounts of money? No, you don't, because Paypal sucks and has always sucked because the goal of Paypal was to monopolize a business rather than create a useful payment system.
Thinking is something humans do, and we could just as easily say that if you don't want people copying your idea, keep it to yourself. If you don't want me humming Happy Birthday, don't teach it to me. But plenty of humans will think of neat things and teach it to others because that's what we do. billg was just the greedy one of the two, compared to the creativity of paula, just as Jobs was the greedy one of the two compared to the openness and creativity of Woz.
The notion that patent monopolies (to use one example of monopoly) encourage investment is true; however, it's completely unproven no matter how widely it is believed, that they encourage "the right" amount of investment, or even a desirable amount of investment. I'll tell you this: everybody I know who is a smart PhD post-doc researcher gets paid peanuts to try to figure out how to cure cancer, so how come we've set up a system where Wall Street douchebags get rich from pharmaceuticals without even coming up with a cure?
I'm not an "anti capitalist" left wing kook, I'm actually completely opposed to left wing nonsense. In addition to being an engineer, I'm an MBA. I love capitalism, but I love the type that the Economist is proposing, the capitalism of competition. My dry cleaner works his ass off and makes only accounting profit, not economic (unfair) profit, because my dry cleaner competes. Brin and Page as starving students would have been happy to make $10 million from inventing Google, or $100 million, so why should we reward them with scads of billions?
So, am I advocating stupid European regulation, or worse, redistribution? No, not at all. The answer is simple, and I didn't invent it, it's well known. If Google was broken up into 10 little Googles, Page and Brin could own just as much of all of them as they own of the one, nothing would be taken away from them. However, the little Googles would compete with each other, and their profits would be driven down to ordinary, normal, economically stimulative levels, and not stultifying, smothering, economically oppressive levels that stop the next generation of Page and Brin's from being able to compete with their own ideas.
Same with social networking, Zuckerberg would have been happy with getting modestly rich owning one of a number of competitors, we don't have to have a system that makes him the uberlord of one worldwide, only-game-in-town social network, and consumers would benefit from having a marketplace of facebooks, just like consumers benefited from a marketplace of bows and arrows.
I'm sick of unicorns, I'm sick of libertarians, and
BTW, I myself am rich (well inside the 1%), well educated (economics and finance!) and smart, my money came from a slice of a monopoly, but I don't pretend that what happened in my case was either my doing or good for the economy. I'm not giving my money away, I like being rich, I'm just saying to the rest of you, stop rooting for unicorns, don't do this to yourselves. Don't advocate for a bigger slice of the economic pie for yourself, that's dumb: just advocate for competition; everybody benefits from lower prices.