Who are the real job creators?

For Your Consideration

Alan CheahJanuary 19, 2012 

The conventional wisdom foisted on us by the propaganda echo chamber convinced many that it is the rich and business that create jobs. It seems logical because they hire workers. However, is hiring a worker the same as creating a job? No.

Following my previous theme of using our intellect we might ask -- would the 1% and business hire if no one wants, needs or can afford their product or service? That would be an emphatic No. When the end consumer buys less than what businesses produce, businesses fire workers. If you subscribe to the idea that when they hire people, they are job-creators then the converse must be true -- when they fire people, they are job-killers. If the latter sounds silly, then the former is just as silly.

When consumers buy as much as business produces, workers remain employed. When they buy more than what businesses can supply, businesses hire more workers to meet demand. This clearly shows that hiring is not job creation. Businesses hire workers to form jobs. Consumer demand creates the need for job formation. Therefore, consumers are the job creators.

Not only are the business and the rich not job-creators but they aren't hiring despite the fact that the rich are hoarding huge sums of cash and corporations are sitting on $2 trillion. The typical Mitt Romney argument, and the whole Republican field, is that business and the rich need to be incentivized to hire. How much incentive do they need? The effective tax rate of the rich is about 17%. 68% of corporations pay no taxes. Corporate profits are at unprecedented highs. The top 1% owns 36% of the nation's wealth. What are they waiting for, more tax cuts?

The Right argues that over burdensome regulations are preventing them from hiring. Let our intellect kick-in for a moment. If existing regulations are a deterrent, how have they been able to amass so much wealth under these same regulations? Obviously neither existing regulations nor tax rates are overly burdensome.

We are now faced with a quandary. Businesses won't hire because there is no demand. Consumers don't spend because they have no jobs. So who is going to jump start the economy? The vaunted private enterprise isn't doing it.

Ironically the government, seen by conservatives as an impediment to economic growth, has to do it. Think of the economy as a swimming pool. When the water isn't flowing, the pool (economy) stagnates. You have to prime the pump to get the water (money) circulating again. Private markets aren't priming the pump. The government has to inject money into the system to get money flowing and the economy working again. The only way is to get money into the hands of those who will spend it -- the middle class, unemployed and poor.

All attempts to get money into the hands of consumers have met resistance. The GOP has obstructed legislation to rebuild our failing infrastructure (roads, bridges, electrical grid, highways, water, sewer systems, etc). They resisted saving our auto industry. The Right argues that you don't spend money you don't have yet they are willing to spend money we don't have to give more tax cuts to the 1% and corporations which after 10 years of Bush tax cuts produced no jobs. Isn't that the definition of insanity -- doing the same thing over and over and expecting different results?

Hiring workers to rebuild our infrastructure puts money directly into the pockets of the workers. They don't hoard it. They spend it. When they do, it creates demand. Businesses hire to meet demand. More jobs are created. Workers spend and more businesses hire, triggering a wave of economic activity. More tax revenue is generated and pays for the debt incurred to fund the stimulative spending which primed the economic pump.

In summary, the rich and business are not job-creators, they are job-formers. Consumers are job-creators. Tax cuts and deregulation do not incentivize job creation ... consumer demand does. In deep recessions or depressions, the government jump starts the economy ... not private enterprise.

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