“Corporations are people, my friend.”

That’s what presidential candidate Mitt Romney yesterday told an attendee at the Iowa State Fair, in response to a question about why Romney’s deficit reduction focus seems to be more on federal entitlement reform than corporate tax reform. Not surprisingly, the onetime private equity executive is getting hammered for it.

For example, John Huntsman spokesman Tim Miller tweeted: “Was American Pad & Paper Company a person/friend?” Venture capitalist Chris Dixon was even harsher: “If corporations are people, then Mitt Romney made his fortune buying and selling people.”

What’s too bad about all this piling on is that it misses the economic policy point Romney was trying to make. Here is the rest of his comment, which hasn’t gotten much attention:

“Everything corporations earn ultimately goes to the people. Where do you think it goes? Whose pockets? Whose pockets? People’s pockets. Human beings my friend.”

Romney doesn’t think corporations are actual people, even though some supporters of the Citizens United decision might disagree. He thinks that corporations help actual people, by creating wealth. Companies make money, which they then distribute to employees, shareholders, etc. You know, capitalism.

The problem with Romney’s claim, however, is that far too many American corporations are not redistributing their wealth. Instead, they’re hoarding it.

Non-financial companies were sitting on more than $1.9 trillion in cash and other liquid assets as of March 31, 2011, according to the Federal Reserve’s most recent “Flow of Funds” report. That’s an all-time high, and means that unemployment is being driven by Corporate America’s unwillingness to hire — not because it doesn’t have the money to do so. Were it to be a person, the best embodiment might be Uncle Scrooge.

And please spare me the “uncertainty” argument. So long as we elect new federal representatives every two years, there will never be any certainty over future tax policy, regulatory policy, healthcare policy, etc. Let alone macro-economic conditions that always are on the move. Any company waiting for “certainty” before hiring might as well shut down its recruitment department.

Romney’s mistake isn’t in thinking that companies are humans. It’s in overestimating their humanity.