Monday, November 24, 2008

The Birds & Bees of Job Creation

With tough economic times getting tougher, we're hearing an endless droning of conservatives repeating their mantra of tax cuts for the rich.

The supposed logic of their appeal/demand for tax cuts for the wealthy is that rich people 'give' jobs to poor people and the richer the rich people get, the more jobs they 'create' and 'give' to poor people.

This fable of where jobs come from is about as real as the explanation that the stork brings babies.

The facts of economic life are that jobs are created by demands for goods & services and middle-class consumers create those demands.

Hiring workers isn't an act of charity, it's an essential ingredient in making profits. Without workers producing, there are no profits for investors to collect.

Rich people/investors/capitalists invest in the means of producing the good and services that consumers demand. But those means of production (factories and offices) don't produce anything. People must be hired to do the work that produces the goods and services. Those people are paid a wage to do the actual work that meets the demand for goods and services. If those workers are paid decent wages, they are the middle-class consumers who create the demand. If the investors are too greedy and the workers poorly paid, the demand and the profits dry up.

And so kiddies, that's the real story of where jobs come from.

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