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Want to create jobs?

Discussion in 'Economics, Business, and Taxes' started by Wahbooz, May 8, 2016.

  1. Wahbooz

    Wahbooz Governor

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    A great letter to the Freep, in regards to jobs creation. I'll withhold the name, but you can see the name and residence at the link.

    Want to create jobs? Start with demand
    A recent letter claimed companies, not politicians, create job. In fact, neither create jobs.

    If I’m a carmaker, the pounds of steel and hours of labor I buy are determined not in the boardroom but in the showroom by the number of customers willing and able to buy my cars. The key word is able. Jobs can move from place to place by customer choices and economic choices that politicians can influence with tax rates and breaks, but the net number of jobs depends on the net purchasing power of the consumers who need and want cars. When money is directed to the investment class, as it is by our present tax system, it goes into commodity speculation, not additional goods.

    It’s time to expose the big lie of trickle-down economics that business is the job creator. Supply without demand is bankruptcy. When tax breaks for business come at the expense of the consuming middle class, you are bypassing economic activity to give business its profit from would-be consumers without having to provide goods and services to earn them from those consumers. That’s why consumers have less today while corporate profits are setting records.

    http://www.freep.com/story/opinion/readers/2016/05/06/want-create-jobs-start-demand/84037936/

    He's absolutely right. If you want a strong, vibrant economy, you need a buying market that can afford to buy products. Henry Ford knew this, when he offered $5 a day to work at Ford Motor Company. And it made him richer than had he only been selling to the wealthy.

    Corporations do not create jobs, tax cuts do not create jobs. Demand does.
     
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  2. Lukey

    Lukey Senator

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    Since 1995, households have expected inflation to be, on average, 3.0%, whereas realized inflation has been around 2.2%, leaving an inflation “gap” of almost 0.8%. What explains this gap? The following is our hypothesis. The four “biggies” for the average American are rent, food, energy, and medical care, in approximately that order. These “four horsemen” have been galloping along at a faster rate than headline CPI. According to the BLS definition, they compose about 60% of the aggregate population’s consumption basket, but for struggling middle-class Americans, it’s closer to 80%. For the working poor, spending on these four categories can stretch to as much as 90% of total spending. Families have definitely been feeling the inflation gap, that difference between headline CPI and inflation in the prices of goods they most frequently consume.”

    ...consumer credit as a percentage of total personal consumption expenditures has risen from an average of 20% prior to 1980 to almost 30% today. As wage growth continues to stagnate, the dependency on credit to foster further consumption will continue to rise. Unfortunately, as I discussed previously, this is not a good thing as it relates to economic growth in the future.
    “The massive indulgence in debt, what the Austrians refer to as a “credit induced boom,” has likely reached its inevitable conclusion. The unsustainable credit-sourced boom, which led to artificially stimulated borrowing, has continued to seek out ever diminishing investment opportunities.”

    Ultimately these diminished investment opportunities repeatedly lead to widespread malinvestments. Not surprisingly, we clearly saw it play out “real-time” in everything from sub-prime mortgages to derivative instruments which were only for the purpose of milking the system of every potential penny regardless of the apparent underlying risk. We see it playing out again in the “chase for yield” in everything from junk bonds to equities. Not surprisingly, the end result will not be any different.

    So, don’t blame those poor consumer’s for not spending – they are spending everything they have and then some.



    http://realinvestmentadvice.com/3-things-explaining-the-consumption-disfunction/
     
  3. Wahbooz

    Wahbooz Governor

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    So who is blaming the consumers in this thread? Did someone sneak in and leave an invisible post? It's no secret that consumers are stretched to the breaking point, and mortgaged past their chins, and I think we all know why. It's called one of the worst recessions ever, brought on by greed. In fact the same greed that had business owners hating Henry Ford, when he offered $5 a day to work for him. But Ford understood that simple economic truth. If you want consumers, you have to make them.
     
  4. Lukey

    Lukey Senator

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    You need to be able to read and comprehend to get the point (I guess). Big government social welfare policies and the fiat money they have used to make it all appear "affordable" is the root of this problem. A lack of demand is impossible - demand is infinite. The problem is the limitations to funding demand, and in order to increase that, you must first produce something and sell it to obtain the wherewithall to consume. It's Say's Law:

    http://www.investopedia.com/terms/s/says-law.asp

    Left wingers ignore this most basic economic law in their zeal to demonize production and glorify labor (consumption). It's back door Marxism (wealth redistribution), and it simply has no merit.

    Ah, the Ford fallacy raises its ugly progressive head again. Henry Ford didn't pay his workers more so they could buy his automobiles, he paid them more to keep them from leaving. Even Paul Krugman gets it:

    As Paul Krugman points out, the effects are obvious:

    But in any case there is a fundamental flaw in the argument: Surely the benefits of low turnover and high morale in your work force come not from paying a high wage, but from paying a high wage “compared with other companies” — and that is precisely what mandating an increase in the minimum wage for all companies cannot accomplish.


    http://www.forbes.com/sites/timwors...ay-wages-its-not-what-you-think/#53e30e4c1c96

    Look, if progressive economic policies worked, we'd be in a new golden age of American labor prosperity after seven years of Obamunism. You people simply need to be relegated to the dust bin of economic history - there is simply no "there, there" with respect to your economic ideology. It fails every where and time it is tried. Yet you keep yammering that we need more of it. It's mind numbing how economically obtuse the progressives have become...
     
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  5. Wahbooz

    Wahbooz Governor

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    I get a real kick out of crap like that. You can produce and produce and produce all you want. If you don't have a buying market, you're stuck with production without consumption. Why can't you see that?

    And where was Henry Ford trying to keep people from leaving? Are you kidding me? If he was offering those wages to tempt them into not leaving the south, and coming up here to work in his plants, he failed miserably. Because Ford offered those wages Detroit's population soared. He offered those wages in order to attract employees. And who cares what Paul Krugman 'gets'.

    And you can rant on all you want about 'progressives', this is a matter of simple economics. America is not experiencing your 'new golden age' because jobs are shifting overseas, and companies are going to eventually suffer. You clowns can continue to think throwing one tax cut after another at companies, and that prosperity will follow, but that is not what is going to happen.

    As far as Obama goes, he is no progressive. But I will give him credit for one thing, he continued the auto company bailouts Bush started. And it was those bailouts, as well as those 'shovel ready projects' you guys claimed didn't exist, is what started Michigan's come back. It wasn't Snyder's nearly $2 billion tax cut to business, nor was it his Wizard of Oz ad, where he was superimposed over a 'road to recovery' that he had nothing to do with the construction of. And if Snyder's conservative policies was working so damn well, Michigan would be ranking one hell of a lot higher than it is in job creation and economic recovery. And don't blame that on Obama, lots of states are faring far better than Michigan; so his so called conservative policies are not working so well.
     
  6. Lukey

    Lukey Senator

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    Um, because it is ass backwards? How do you fund this consumer demand if something isn't produced first to provide the income? This is the fundamental flaw in the left's (Marxist) fixation on demand. Demand is infinite. The ability to fund demand is what gives rise to commerce. Last time I checked, money doesn't grow on trees...

    Yes, you were fundamentally wrong about the Henry Ford story. So now you admit he paid the (higher) wages to attract (and retain) employees, and not simply so they could afford to buy his cars. But don't worry, lots of lefties get that completely wrong (including the President).

    Yes, I agree - Obama continued the disastrous Bush economic and fiscal policies (and the wars). Bushbama is what I call the post 2000 era. Two of the worst Presidents in our history. And actually, not really all that many areas are doing well under Obamaunism:

    http://www.zerohedge.com/news/2016-01-12/93-american-counties-havent-recovered-recession

    I give Obama credit for what he did - producing the worst economic recovery of the post-War era. You simply excuse his failures because you want to believe in the big government wealth redistribution fairy tale he told over and over and over. Unfortunately, there' no evidence whatsoever that any of it did a lick of good.
     
  7. resident_evil

    resident_evil Senator

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    There is a shit load of demand in the third world and still they don't create jobs. As a matter of fact they often destroy jobs. I'm thinking Venezuela or any number of countries in Africa. Hmmmm....

    I think you have to rethink your premise. I think you have to better appreciate business people who create businesses and in the process create jobs.
     
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  8. Lukey

    Lukey Senator

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    Excellent point - there is no "inadequate aggregate demand" in Venezuela:

    http://www.zerohedge.com/news/2016-...ounded-after-5000-loot-supermarket-looking-fo

    What there is is a dearth of production to pay for it. These kinds of ironclad proofs of the wrong headedness of the lefty policy positions never sinks into their thick skulls. This situation in Venezuela is simply another "failure of capitalism..."
     
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  9. LanceFreeman

    LanceFreeman Mayor

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    When capitalism fails, as it has in our country, it fails because of unbridled corruption and greed. And this happens because the consumer (i.e. the average citizen) is not adequately protected from corporate predation. Capitalism fails in America because of the sweetheart arrangement that corporations have with Washington; an arrangement that screws over the average citizen. Socialism fails because it is unworkable in the long run. This has been proven over and over.

    Socialists are wonderful at taking existing wealth and distributing it, and for a while, everybody feels richer and more prosperous. The problem starts when all the existing money is gone and there is no new money to replace it. All socialist states start with great promise and wind up poor. This is what happened in Venezuela. The fall in oil prices exposed the weaknesses in Venezuela's socialistic economy. Socialists do not know how to create new wealth. Take China's example: when the Great Leap Forward failed, the Communist regime had to resort to capitalistic practices in order to save itself.

    For a nation to be prosperous, it needs a mechanism that can create new wealth on a continuous basis. At the same time, it needs responsible government that will look after the interest of the populace. An irresponsible government that is self-absorbed and corrupt, can [Unwelcome language removed]-up any system.

    Btw, a prosperous capitalistic economy would include certain beneficial aspects of socialism, like a social safety net that would mitigate the misfortunes that individuals might encounter, take care of the aged and infirm, etc. Too many people equate capitalism with the laws of the jungle and survival of the fittest. Not necessarily so.

    America would be a great place to live if we weren't ruled by bastards.
     
    Last edited: May 15, 2016
  10. resident_evil

    resident_evil Senator

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    Of course foundational stuff like rule of law and property rights (think Bill of Individual Rights) are critical to business and therefore job creation.
     
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  11. Wahbooz

    Wahbooz Governor

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    Hahaha, you and Luke crack me up. Third world workers get paid how much???? And how much are products???? Now balance that out. At the least 40% of the people of Africa live in abject poverty. So what kind of demand = consumption do you expect there? And Venezuela? Well let's see. 31.6% live under the poverty level as of 2011. domestic consumption fell 1.6% while government consumption rose 2%. Now is that a positive indicator? Are you really going to base an argument on that, when government has to pick up the slack for consumers? I wouldn't think that'd be wise.

    Like you, Luke seems to think paying workers whatever they choose, will create demand. Well here's your problem. Without a viable income, the demand remains, but the consumption doesn't happen. Do you really think companies like Gateway, under Snyder sold a shit load of computers in Mexico? No, and in fact the purchases of Gateway computers here in the U.S. began a serious slide, until Snyder sold the company to China.

    And I know about job creation. How many companies have you run? How many people have you hired?
     
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  12. Wahbooz

    Wahbooz Governor

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    Luke, demand without the power to consume is worthless. Period. Neither you nor Snyder seem to comprehend that. You can cut business taxes to nothing, and heap that revenue obligation onto the workers, and you get what Michigan has today. Nearly the slowest damn economic recovery in the country. But then who gives a damn, right? Business people are riding high........ for the moment. The next crash will take more of them out.

    And you can call it Marxism or whatever you want. How long have you been in the business world, Luke? How much have you actually seen, or dredged out of Fox News Network? You're blind to reality.
     
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  13. Wahbooz

    Wahbooz Governor

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    Attract workers, you can't seen to get that through your thick skull. He didn't need to retain unskilled workers, he wanted to attract skilled workers, and that is what he did. When Ford offered the $5 a day wage, skilled mechanics flocked to Ford Motors, and cost of production was reduced, production was up and training costs were down. All very befitting of a profitable cost report. His competitors for workers were the ones who were forced to raise their wages or lose their best workers.

    And by the way, you're the one whose hung up on Obama not me. But just a little side note. Compare Bush's economic numbers to Obama's. Just the Dow shows how things were when Bush left. The DJIA was 6507 in 2009, and by May 2015 it was 18312. Yup, investors see the country in ruins.
     
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  14. resident_evil

    resident_evil Senator

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    Way to blow it. Next time don't duck and it might not go over your head. ha ha
     
  15. Lukey

    Lukey Senator

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    Yes, this is MY point. Demand without having (already) produced wealth to pay for it is "worthless" (i.e. unsustainable). Perhaps you are unclear about how Michigan's situation came about - it wasn't run into the ground by conservatives and free market economics; but rather by six decades of almost single party (progressive) rule and an anti-capitalist agenda. This isn't rocket science. You keep pointing to the failures of your ideology and then turn around and blame the other guys for your politics' shortcomings. That is something you need to start comprehending. I'm sure you mean well, but the fact is that all you have is opinions masquerading as theories.
     
  16. Lukey

    Lukey Senator

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    1) So we're clear here that you agree now that Ford did NOT pay his workers more simply so they could buy more, right?

    2) Go back and reread my post - Bushbama is my way of saying they both sucked, from an economic perspective. As for the stock market:

    Screen Shot 2016-05-16 at 8.02.54 AM.
    On a real basis, the returns since 2000 are negligible, under both Bush and Obama. Not sure who you think you are fooling here, but it sure appears that it's really only you.
     
  17. Wahbooz

    Wahbooz Governor

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    When you get around to it, how about you 'splain to me, Lucy' how I blew it.
     
  18. Wahbooz

    Wahbooz Governor

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    No, we are not clear. Ford was a 'welfare capitalist', and he believed in enriching the workers, which would enrich the economy. And he was right.

    Like I said, I don't care what you think of Obama. But every time you fail to come up with a worthwhile response to me, you invoke Obama. But since you continue to bring that up, and now you claim negligible, it is apparent to you that going from 6,507 to 18,312 is negligible. I find that comical. Oh I see, 'the real index'. Hahahahahahahaha
     
    Last edited: May 16, 2016
  19. Wahbooz

    Wahbooz Governor

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    No, that was NOT your point.

    And once again you make an asinine comment about Michigan, and now I will re-school you one more time. Michigan has NOT been under progressive control for the past six decades. Luke, you just spout off, and have no knowledge about shit. Here is your progressive rule for 6 decades in Michigan. One more time for someone who has the memory of a gnat. 6 decades takes us back to 1956. And by the way, I went back further than 6 decades, and the majority was under Republicans. The governors prior to Williams were Republicans as well.

    G. Mennen Williams 1949 to 1961 Democrat
    John Swainson 1961 to 1963 Democrat
    George W Romney 1963 to 1969 Republican
    William Milliken 1969 to 1983 Republican
    James Blanchard 1983 to 1991 Democrat
    John Engler 1991 to 2003 Republican
    Jenifer Granholm 2003 to 2011 Democrat
    Rick Snyder 2011 to present Republican

    In fact the majority of Michigan governors have been Republican or their founders, the Whigs. 6 decades, eh? Can't wait to see how you parse that. "That's exactly what I said, Michigan was.................(add in bull........). the past 50 years, Michigan has seen a majority of Republicans. And with the exception of Romney and Milliken, the rest have led the state into economic problems. Why do I waste my time.
     
    Last edited: May 16, 2016
  20. Lukey

    Lukey Senator

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    Regardless of who was in the Governor's mansion, the politics of Michigan have been anything but "conservative." It was a labor dominated economy, with the leftist political agenda that goes hand in hand with that. Most of the "Republicans" who held the office were liberals. The fact remains that it wasn't free market capitalism that ruined the auto industry and Michigan's economy - it was the unions and a progressive political agenda.
     

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