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Thread: Another Myth Debunked. A Big One!

  1. #1
    Atypical is offline

    Another Myth Debunked. A Big One!

    Businesses Do Not Create Jobs
    Thursday 11 November 2010

    by: Dave Johnson

    Businesses do not create jobs. In fact, the way our economy is structured the incentive is for businesses to get rid of as many jobs as they can.

    Demand Creates Jobs

    A job is created when demand for goods or services is greater than the existing ability to provide them. When there is a demand, people will see the need and fill it. Either someone will start filling the demand alone, or form a new business to fill it or an existing provider of the good or service will add employees as needed. (Actually a job can be created by a business, a government, a non-profit organization or just a person doing the job, depending on the nature of the good or service that is required.)

    So a demand creates a job. A person who sees that houses on a block need their lawns mowed might go door to door and say they will mow the lawn for $10. When houses start saying "Yes, I need my lawn mowed" a job has been created!

    Demand also creates businesses. The person who is filling demand by mowing lawns for people might after a while have a regular circuit of houses that want their lawns mowed every week, and will buy a truck and a new mower and hire someone to help. A business is born!

    Businesses Want To Kill Jobs, Not Create Them

    Many people wrongly think that businesses create jobs. They see that a job is usually at a business, so they think that therefore the business "created" the job. This thinking leads to wrongheaded ideas like the current one that giving tax cuts to businesses will create jobs, because the businesses will have more money. But an efficiently-run business will already have the right number of employees. When a business sees that more people are coming in the door (demand) than there are employees to serve them, they hire people to serve the customers. When a business sees that not enough people are coming in the door and employees are sitting around reading the newspaper, they lay people off. Businesses want customers, not tax cuts.

    Businesses have more incentives to eliminate jobs than to create them. Businesses in our economy exist to create profits, not jobs. This means the incentive is for a business to create as few jobs as possible at the lowest possible cost. They also constantly strive to reduce the number of people they employ by bringing in machines, outsourcing or finding other ways to reduce the payroll. This is called "cutting costs" which leads to higher profits. The same incentive also pushes the business to pay as little as possible when they do hire. (It also pushes businesses to cut worker safety protections, cut product quality, cut customer service, "externalize" costs by polluting, etc.)

    This obviously works against the interests of the larger society, which wants lots of good jobs with good pay. And businesses, while working to cut jobs and pay less, need other businesses to hire lots of people and pay well, because that is what creates the demand that makes all the businesses work.

    Government To The Rescue

    This is where government comes in. Government is We, the People, working for that larger societal interest. In our current system -- when it works -- we use government to come up with ways to balance the effects of the profit motive -- which pushes for fewer jobs at lower pay -- with our larger need for more jobs at higher pay for us, and for the good of all the businesses. We, through our government, create and regulate the "playing field" on which businesses operate. We set minimum wages, limits on working hours, worker safety rules and other rules designed to keep that balance between profit incentive and demand, and that playing field level. (We also provide the infrastructure of roads, schools, courts, etc. that is what makes our businesses competetive with businesses in other countries. The individual interest in paying less taxes for this has to be balanced with the larger interest that we all pay more for this, but that is another post, titled, "Tax Cuts Are Theft.")

    Corrupted

    Obviously businesses in our system must be kept from having any ability whatsoever to influence government decision-making in any way, or the system breaks down. When businesses are able to influence government, they will influence government in ways that provide themselves - and only themselves - with more profits, meaning lower costs, meaning fewer jobs at worse pay and not protecting workers, the environment or other businesses. And, they will fight to keep their ability to influence government, using the resulting wealth gains to increase their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government ...

    Unfortunately this is the system as it is today.

    ________________________________
    Which is a good reason not to pander to corporatists who continually want to decrease already low corporate tax rates in the name of "creating jobs."

  2. #2
    Havakasha is offline
    Please do not allow S&L to read this. it might explode his head.

  3. #3
    SiriuslyLong is offline
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    Actually, this is a very interesting article if look past the incednitary liberal bias - "Businesses Want To Kill Jobs, Not Create Them", but most should be able to understand the point without buying the BS. Yes, there is always a continued drive for improvement and efficiency. Companies have to compete, right? And yes, their goal is profit. More specifically, the goal of a corporation is to return value to the stockholder. It's a good goal.

    It is a pity that our Government cannot embrace this concept. Perhaps our tax dollars would be more effectively spent such that we would not have to have the discussion on taxing the rich?? Wouldn't it be great if Congress declared that due to restructing, we could have more services with less taxes? That will never happen though. Government is not accountable. They are the ones in power. Why would they want accountability?

    I would agree that without demand, there are no need for jobs. What clearly is a contentious issue is the desire of government to "create" demand. Some see this effort as simply reinflating the bubble. Maybe the "new" demand is less? Everyone points to Japan and the lost decade. Japan is mature, and pretty much land locked; there's no where to expand. Maybe all that is left in terms of growth / productivity is the export market?

    "Government to the rescue" - that's kind of funny. I'd run if someone said that to me lol. Can you say Fannie Mae? Can you agree that SS is currently on a path to insolvency? Please. I have far more faith in corporations that compete in a market. They are truly accountable as are the people who work for them. It's pure. THEY pay me. THEY provide me benefits. THEY innovate to make our quality of life better, safer, more fun. Yes, I'd be an idiot not to say some are corrupt or make mistakes, but that's the EXCEPTION. It seems that most liberals lie in wait for something horrible to happen so they can get on their soap box and claim corporate greed led to the disaster, and that more government is needed to stop this "abuse".

    Lastly, having agreed that demand does indeed drive jobs, I also think that one can say that a more profitable company is more LIKELY to expand its workforce than a less profitable company. Wouldn't you agree?

    It really was a good article. Thanks for posting it.

  4. #4
    Atypical is offline
    "Can you agree that SS is currently on a path to insolvency?"

    That is untrue. I have refuted it and others have as well.

    You need to stop repeating falsehoods that are only used by those who seek to eliminate or seriously reduce the program.

  5. #5
    SiriuslyLong is offline
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    The picture isn't pretty.

    Myth No. 4: Social Security will run out of money in 2041. Social Security will still be receiving payroll taxes from workers (and corporations) in 2041. What may have disappeared by then are the assets in the Social Security trust fund.

    Even that isn't cast in stone, however. The Congressional Budget Office in June 2006 projected that the trust fund wouldn't dry up until five years later, in 2046. The CBO used different assumptions than those used by the Social Security Administration, projecting faster growth in worker earnings, higher interest rates and lower inflation.

    Here's how the Social Security Administration projects the timeline:

    In 2017, Social Security will begin paying out more than it takes in. For the first time, it will have to use the interest being paid on the securities it holds in order to meet its obligations.

    In 2027, Social Security would have to start redeeming the securities themselves.

    By 2041, Social Security would have cashed in the last security, and the system would have enough revenue to pay out only 75% of promised benefits. That percentage would drop over time if Congress failed to act.

  6. #6
    Atypical is offline
    Raise the limit on contributions from approximately 107,000; problem solved.

  7. #7
    SiriuslyLong is offline
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    Quote Originally Posted by Atypical View Post
    "Can you agree that SS is currently on a path to insolvency?"

    That is untrue. I have refuted it and others have as well.

    You need to stop repeating falsehoods that are only used by those who seek to eliminate or seriously reduce the program.
    And I don't want the program reduced. I have a hell of an investment in it as does the company I work for. And it pisses me off that the age requirement may go up. I'm going to have to rely on my 401k investments (primarily in corporations).

  8. #8
    Havakasha is offline
    You got to love how much time Conservatives spend on Social Security when its never added a single dollar to the deficit. They focus on it because it bothers them philosophically and so they spend enormous time in trying to talk about a program that needs tweaking 20 to 30 years from now, when there are so many other areas to focus on NOW.

    Keep your eye on the ball. JOBS, HEALTH CARE etc.

    You would think they might have been worried about the 4 billion dollar Bush tax cuts
    or the cost of the Iraq war.
    Last edited by Havakasha; 11-15-2010 at 01:49 PM.

  9. #9
    SiriuslyLong is offline
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    Quote Originally Posted by Atypical View Post
    Raise the limit on contributions from approximately 107,000; problem solved.
    Are you suggesting everyone pay more? Ugh.

  10. #10
    SiriuslyLong is offline
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    Quote Originally Posted by Havakasha View Post
    You got to love how much time Conservatives spend on Social Security when its never added a single dollar to the deficit. They focus on it because it bothers them philosophically and so they spend enormous time in trying to talk about a program that needs tweaking within 20 to 30 years from now, when there are so many other areas to focus on NOW.

    OK Lloyd - forget social security, just make an attempt to understand the point as I did regarding the article. Look past the "conservative bias". Can you do that for once?

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