The Real Job Creators: Consumers

[RommelDAK]

I posted this in economics, but another user suggested that I put it here, too. I'm very new around here so didn't think to put it in General Discussion, too:

http://www.forbes.com/sites/johntharvey/2012/06/17/job-creators/

(Apologies for posting something I wrote, but I thought it would be of interest here.)

[Bozita]

1. Job creators are folks with spending money who are going to spend it.

Not send it to Switzerland or the Cayman Islands to avoid taxation.

[Major Nikon]

2. It's just a rare bit of common sense from the media

In this case the only thing really unusual is the fact it comes from Forbes (which does manage to squirt out a good article every now and then along with their usual shit).

Even MSNBC routinely allows the GOP to get away with their "job creator" line, which is nothing more than pure unadulterated supply side horse shit.

[pipoman]

3. There are no jobs for the traditional "middle class"

because of trade policy which puts the traditional middle class in competition for jobs with people who live with dirt floors, no running water, and no labor protections. The battle cry of 'I believe US workers can compete with any workers in the world' is such horseshit, I can't believe how many Democrats espouse it.

[Zalatix]

8. Not many Democrats espouse it anymore.

Except for the handful who think their jobs are immune.

[hack89]

13. A related issue is that there is no real future for high school grads

any future career that can support a family will require post-high school education. Not necessarily a college degree but an associates degree or a certification program. All the good careers in health care, for example, like xray tech or lab tech require post-HS education. The days of a HS grad or even an HS dropout supporting a family by working in a low tech factory is gone for ever - even manufacturing jobs no require some post HS education as computers and other high tech take over the factory floor. Professional jobs like plumbers, electricians and HVAC repairman require a high level of math and technical savy as micro-processors become ubiquitous.

Part of the problem is the education system - the economy has fundamentally changed but it has not. Too many kids are are not leaving school with the tools they need.

[Raine]

4. EXACTLY nt

[Populist_Prole]

5. Conservatives strongly chafe at this notion a lot now

Which means they know they've been found out. Also, in this case there's really no way they can spin it their way by appealing to social issues the way they do with other shit, so they usually go ad-hominem.

[annabanana]

16. ^^ *1 ^^ They are totally busted.

Watching them trying to pretzel this into supply-sided nonsense is painful. They usually "answer the question they wish they'd been asked" or just try to shout it down.

[MannyGoldstein]

6. Thank you for this

And welcome to DU! A real author amongst us!

Agreed. The only way out of this depression is to put money into the hands of the 99%. Giving it to the 1%, which is much or most of what's been done, isn't much better than putting it in the ocean- it mostly gets used to bid up asset prices.

[Sherman A1]

7. Thanks for posting!

[Zalatix]

9. Wow, what an awesome article! Thanks!

[Tennessee Gal]

10. Excellent.

Thanks for posting.

[geckosfeet]

11. Short and to the point.

The Real Job Creators: Consumers

If the demand for goods and services stays where it is today and we only cut industry taxes and regulations, there is absolutely no reason to think that firms would expand employment. Rather, they would continue to produce at the same level and simply earn higher profits. On the other hand, if we leave taxes and regulations untouched but increase demand, entrepreneurs will happily add workers. And that is the root of the problem today. The bottom line, lost on Mr. Romney and many others, is that the real job creators are consumers. The direct route to reducing unemployment is boosting demand, not reducing costs.

[RommelDAK]

12. A poster in the Economy section suggested I post a few paragraphs

But, as this is one of the shortest entries I've ever written, I think I can safely post the whole thing!

Today on Face the Nation (hosted by fellow Horned Frog, Bob Schieffer), I heard Mitt Romney add his voice to the chorus of those saying that economic recovery would follow if only we relieved the terrible burden that the government has placed on the nation’s job creators: business. Were taxes and regulations were relaxed, this would reduce costs sufficiently to allow firms to do what they are already dying to do, which is expand operations.

But even if we grant the argument that business taxes and regulations are high (which is by no means clear–in fact, it’s easier to make a case for the opposite), this ignores two crucial facts. First, as my friend Mike Norman has pointed out, employees are a cost, usually the most significant one faced by firms (Mike Norman Economics). For that reason, every rational entrepreneur’s goal is to reduce, not increase, the number of workers they have to pay. And quite right. Entrepreneurs have families, too, and they need to feed and clothe them. It would be irresponsible to do otherwise.

Second and more fundamentally, no matter how much you lower costs, if you don’t have more customers, you won’t hire more workers. If the demand for goods and services stays where it is today and we only cut industry taxes and regulations, there is absolutely no reason to think that firms would expand employment. Rather, they would continue to produce at the same level and simply earn higher profits. On the other hand, if we leave taxes and regulations untouched but increase demand, entrepreneurs will happily add workers. And that is the root of the problem today. The bottom line, lost on Mr. Romney and many others, is that the real job creators are consumers. The direct route to reducing unemployment is boosting demand, not reducing costs.

Ask yourself this question: what do you really think caused firms to lay off so many workers that unemployment jumped from 4.4% in May 2007 to 10% in October 2009 (remaining at 8.2% today), a sudden spike in business regulations and taxes, or a collapse in demand? It is impossible to imagine that anyone truly believes the former to be the case. In reality, the reason we are stuck where we are is because the middle class lacks jobs and incomes–something that will get markedly worse if we continue to try to cut government spending and balance the budget (many of my other blog posts cover this issue so I’ll say no more here).

In conclusion, let me add my voice to the chorus of those who actually understand what’s happening in our economy: WE DEMAND AGGREGATE DEMAND!

[KharmaTrain]

14. Wall Street Is Detached From Consumers...

Their biggest profits are made from playing the market...doing what they can to manipulate a stock price and cashing in on the stock options. Sales and real revenues mean little as taking on long term debt for short term gains became a virtue on "teh street"...however you made the money now mattered. If it meant bankrupting the company...so be it as well. Consumer? They are given what's fed to 'em.

I agree that is the consumer that generates the real wealth in this economy. Putting extra money in 100 million pockets will ripple far greater through the economy than 100 million in 1 person's hands. The lack of corporate spending and credit has depressed the consumer market and thus prolongs the recession/depression for most. However, on "da street" the money's still being made...

[Wounded Bear]

15. As I like to put it....

You can't drive prices low enough to support an economy on double digit unemployment.

Pretty simple concept, really.

[RommelDAK]

17. Well said!

n/t