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Just because it bears repeating: Demand creates jobs not the rich

Discussion in 'BBS Hangout: Debate & Discussion' started by Phillyrocket, Dec 15, 2011.

  1. Phillyrocket

    Phillyrocket Member

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    http://finance.yahoo.com/blogs/dail...BzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3

    Glad to see more of this common sense in print. Wealth concentration is crippling this country because the economic impact of spending by the wealthy is not as far reaching as the impact of spending by the middle class.

    No matter how low you cut interest rates or taxes for businesses or the rich they will not hire if there is not demand for their products or services.
     
    3 people like this.
  2. glynch

    glynch Contributing Member

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    The Iraq War Was Horible Disaster for Iraqis

    Deleted.
    what a screw up to start a new thread within an old one. Worse than derailing.
     
    #2 glynch, Dec 15, 2011
    Last edited: Dec 15, 2011
  3. FranchiseBlade

    FranchiseBlade Contributing Member
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    Absolutely right. I'm tired of the GOP calling the wealthy "job creators" when they try to keep their taxes as low as they are now. The middle class are as much job creators as are all consumers. They are the real job creators. Damaging their programs and income is what impedes new hiring.
     
  4. Space Ghost

    Space Ghost Contributing Member

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    The idea that government stimulation will create jobs is just as silly as giving the wealthy more tax breaks in hopes of job creation.

    Of course job creation is going to come from demand. The only catch is that most jobs from this "demand" are low income jobs which Americans are too good for. For some reason, we all think we should be making at least 60k+ a year working white collared jobs.

    Its not Obamas fault or Bushes fault the economy is in a dump. Its years and year and years of massive debt built up across the board, from government, to business, to personal and bad investments.

    Our politicians both in the state and in washington are more interesting in maintaining their party in power. The public fuel this by continuing to vote these same fools into office, not because they think their party is good, but because they believe the other party is so much more wrong.
     
  5. Mr. Clutch

    Mr. Clutch Contributing Member

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    There are two sides of the equation.

    Demand AND supply.
     
  6. Phillyrocket

    Phillyrocket Member

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    Building roads and bridges creates jobs you cannot argue with that fact.

    However that was not the point of the article or the thread, the point is all cutting taxes helps to create is that debt that you blame for the economic malaise we are in.

    Taxes need to be raised on those that have benefited the most over the last 30 years because it is glaringly obvious that nothing has trickled down.
     
  7. subtomic

    subtomic Contributing Member
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    Of course there is, but its pretty clear that demand is significantly less than supply at this time.

    The real problem is that executive wages have increased so dramatically while the rest of the workers have seen no increases at all. This means that your average worker is either having to cut costs (not good for economy) or take on more debt (also bad for economy).

    The article correctly points out that the economy would be in better shape if the executive passed along some of his earnings to his subordinates. If the executive gets that money, it gets stowed away. If the subordinates get the money, then they are more likely to spend it, thus benefiting the economy. I might add that the latter option has the added benefit (from a conservative standpoint) that it won't be taxed at as high of a rate as it would in the former option.

    But if that doesn't happen, then you see more and more of the "subordinate" class relying on social services (provided by government) to handle their needs. You can either fund these services through higher taxes (which takes money out of the economy) or you can slash them and see an increase in crime and instability. If the latter occurs, you'll see a need for higher taxes to pay for the extra law enforcement.

    The other solution is to change our consumer society (maybe to one where goods are less disposable and there's more of a need for service). I'd actually prefer such a society, but I don't know if it's possible to make such a conversion without facing an even bigger employment problem (a combination of labor shortages for service positions and job shortages for workers tied to the consumer society). I certainly don't trust the current crop of politicians to handle such a change competently.
     
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  8. Phillyrocket

    Phillyrocket Member

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  9. Major

    Major Member

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    Corporations are loaded with record setting profits and record levels of cash. Supply isn't a problem here.
     
  10. Phillyrocket

    Phillyrocket Member

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    To further the point let's see some charts!


    While productivity has increased, inflation-adjusted wages have been flat for fifty years


    [​IMG]



    Taxes for the middle quintile have stayed flat, even as tax rates plunge for the richest Americans


    [​IMG]


    CEO pay has skyrocketed 300% since 1990. Corporate profits have doubled. Average "production worker" pay has increased 4%. The minimum wage has dropped.


    [​IMG]


    Top CEOs earn around 1,723 times as much as the average worker. It was not always like this


    [​IMG]


    http://www.businessinsider.com/new-...some-cities-are-suffering-more-than-others-24

    Much more in the above link
     
  11. Mr. Clutch

    Mr. Clutch Contributing Member

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    I agree that right now, demand is more of a problem.

    That doesn't change my post.
     
  12. SamFisher

    SamFisher Contributing Member

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    It doesn't, it's just as irrelevant as it was before....unless you're going to go all Say's on us. How u?
     
  13. Mr. Clutch

    Mr. Clutch Contributing Member

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    Uh no, nothing to do with Say. Just this:

    [​IMG]
     
  14. Dairy Ashford

    Dairy Ashford Member

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    I kind of guess that both of these things at the same time would actually work, but we're at a point in our history as a nation where we as citizens have to start weighing long term fiscal solvency against perpetual annual growth. It's like being in your mid-thirties and having a crappy job; do you take out a loan to go to law school, or just cut back your expenses and try to maintain cash flow for the next forty years?
     
  15. SacTown

    SacTown Member

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    Good article. I like it.
     
  16. SacTown

    SacTown Member

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    I agree with this actually. Govt stimilus is just as flawed as the concept of rich people creating jobs. This is why the govt and the people should focus on cutting taxes on the middle class instead of stimulating and allow the tax increases on the 1% to go back to where they belong.
     
  17. Pizza_Da_Hut

    Pizza_Da_Hut I put on pants for this?

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    I had to briefly turn off my browser's republican vision add on. The title of the thread originally read: Just because it bears repeating: Demand creates jobs not the job creators

    I also had to do this earlier today when I was reading an article about Job creating cake...
     
  18. SamFisher

    SamFisher Contributing Member

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    So if the government hires 100 people to fix a bridge, it doesn't create 100 jobs?

    Explain.
     
  19. JuanValdez

    JuanValdez Contributing Member

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    The republican counter-argument (which I don't really buy) would be: to invest money in an enterprise, for which people would be hired to satisfy demand, it has to provide a return over a certain hurdle rate to be worth the risk. By reducing the tax rate, you increase the return and entrepreneurs will clear the hurdle rate more often so more business will be started and profitably run and will employ people.

    In the case of infrastructure improvement programs done for the sake of job creation, you have the government acting as an irrational investor -- they are spending without proving out that the return will clear the hurdle rate that indicates the project is worthwhile. It can create some jobs in the short-term to redistribute wealth, but if a better road doesn't add value to the economy over and above the old road, it wasn't worth the dollars spent on it and will be a loser in the long-term. Taken to its extreme, it's like paying one guy to dig holes, and paying another to fill them up again. They get their wages, but they create no value and the whole program is unsustainable in the long-term. Demand created by the hole-diggers won't help the economy because ultimately they don't create enough value to justify their demand. We need to find them something useful (with a return on investment) to do.

    The counter-counter-argument then would be that infrastructure improvement will return tangible monetary benefit to the economy. But, it's hard to prove that out. For a road, are you going to add up all the improvements in better drive times, better fuel economy, fewer auto repairs, and so on to justify the cost? And compare the variable benefits of doing it now or later? It's all a little loose. I know there are some cases (like that one bridge) where the argument will be a slam-dunk. In other cases, we won't really know if it is value-additive or not.

    My own feeling on government projects is that we should always do them regardless of the times if they are value-additive. And we have not been good so far at a federal level recognizing when infrastructure is worth replacing. And, in times of hardship like this one, it's probably better to err on rebuilding too soon so that, if nothing else, hole-diggers can get their wages to hold them over until private companies have work for them. It's not going to fix anything about the economy; it only mitigates some damage. And, it's something we can't keep doing large-scale long-term.
     
  20. SamFisher

    SamFisher Contributing Member

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    That's actually not the republican counter argument - the Republican counter-argument these days either implicitly or explicitly assumes that some version of Say's Law applies - Supply creates its own demand.
     

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