Saturday, November 13, 2010

Businesses Do Not Create Jobs

Republicans want us to believe that the wealthy and businesses need tax cuts so that they will have more money and therefore create jobs.  Give them enough money and they will hire us.  I say

Businesses do not create jobs.  DEMAND CREATES JOBS

Here is a great article about it.  They explain it better than I can.

Check out a couple of excerpts:

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.
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.
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.
 Actually, an argument can be made for taxing them more, not less.  If they have less profit, they will work harder to create demand which, in turn, will create jobs.  So, lets tax the shit out of them so that they will work harder to create a demand for their products.

More demand, more jobs, more profits.  Everyone wins.


  1. Globalized Corps. are making more money abroad than they are here at home.
    What is it that we always hear? ---"Sales are down, but profits are up".

    How can that be?
    They import goods that are made in slave labor countries. They have less people on the payroll here at home. They pay less taxes, if any at all.
    Their health care costs have gone DOWN. Yes down. They are spreading the cost to the employee, or getting rid of it all together.
    This was a part of the O HC plan.
    Get HC away from the Corps and give the cost to the tax payer.

    They are investing over seas not at home.
    When was the last time you heard of an American company actually building a new factory here at home?
    Austerity is coming to Americans.
    Instead it should be going to the Corps.

  2. RZ,
    It another indication that Corporations are running America, not Americans.

    I think it is time we begin saying:

    "It is time to take our country back."

  3. We're in a Catch 22. With no or few jobs there is no demand. With no demand there'll be no hiring. People that do have jobs are working to fill the void of laid off workers and are afraid to spend least they land up like their counterparts on the unemployment line.

    As for health care I don't know if you knew this but prior to Nixon nearly all hospitals and insurance companies were non profit. He came in with the for profit HMOs. I always wondered why there was never any problem when getting hurt as a kid. Now I know why.

  4. Even Alfred E. Newman could understand this excellent explanation, but not our current bunch in D.C.

    The big lie has been told so many times that it has become gospel, even to those it hurts the most. What a pathetic lot we are.

  5. Jerry, add to that that business has a cash reserve of $1 Trillion. If that has not spurred them to create jobs, the only thing that will is putting money in the hands of people who will use it to buy their products and service, as you say, DEMAND!

  6. OMG! Blesphemy I say, blesphemy!

    The last 30 years have been the dark ages inregards to economic knowledge in the United States...

    I am waiting for the right wing to finally realize that before Ayn Rand there was Adam Smith!

    Sadly the people who need to read this will continue to believe that lower taxes give companies an incentive to create jobs and that doing away with minimum wage will really foster job creation....

  7. Demeur,
    It is a Catch 22 in a sense, but throwing money at corporations and the wealthy does not create jobs. If you are going to throw money around, it should be thrown at people who will spend it to create demand.

    Job creation is fueled by demand, not profit.

  8. TomCat,
    Yes, demand creates jobs, not profits. If anything, profits allow companies to find ways to increase their productive with fewer people, hence job elimination.

  9. TAO,
    The right wing, at least the leaders who are spewing out this tax cut rhetoric, are not interested in creating jobs. Their goal is to increase profits which, in turn, increases the flow of money to them.

  10. What do corporations do with savings from a federal tax cut? The last thing they do is enlarge their payroll. The first thing they do is invest to make a profit. The best profitable investments are overseas. Health of the U.S. economy, be dammed.
    CEO's today believe that posting the highest profit earnings makes the best capitalist. That is an error, of a childish belief, that capitalism is only about making the most money, it is not.

  11. I understand, prohibit private businesses since they are evil and profit motivated.
    Let the government run pseudo businesses, it has worked elsewhere.

  12. So where is the demand for "green" goods and services?
    The government has created "green" jobs, since there is not enough demand for "green" goods and services.
    Many of those jobs end up over in China.
    So the governement creates jobs, not demand in this case.

    I am glad my tax money is used to pay workers on the other side of the world.