Wednesday, June 20, 2012

The Real Job Creators: Consumers

From Forbes courtesy of BuzzFlash:

First, as my friend Mike Norman has pointed out, employees are a cost, usually the most significant one faced by firms (Mike Norman Economics). For that reason, every rational entrepreneur’s goal is to reduce, not increase, the number of workers they have to pay.


Second and more fundamentally, no matter how much you lower costs, if you don’t have more customers, you won’t hire more workers. If the demand for goods and services stays where it is today and we only cut industry taxes and regulations, there is absolutely no reason to think that firms would expand employment. Rather, they would continue to produce at the same level and simply earn higher profits. On the other hand, if we leave taxes and regulations untouched but increase demand, entrepreneurs will happily add workers. And that is the root of the problem today. The bottom line, lost on Mr. Romney and many others, is that the real job creators are consumers. The direct route to reducing unemployment is boosting demand, not reducing costs.

More here.

Game, set, and match. Argument over.

Actually, it was never really much of an argument, once you sit down and work your way through it for, like, five seconds. After all, the Republicans have been offering tax-cuts-for-the-rich and deregulation as economic panaceas for many years now, regardless of the economic situation. Inflation? Cut taxes for the rich and get the government off the businessman's back! Unemployment? Cut taxes for the rich and get the government off the businessman's back! High energy prices? Cut taxes for the rich and get the government off the businessman's back! Health care crisis? Cut taxes for the rich and get the government off the businessman's back! You get the idea. And the ironic reality is that we have, more or less, been doing exactly that for a quarter of a century because the right wing has been so forceful and omnipresent in its assertions that it is now the Washington consensus.

You'd think that after thirty years of this shit we'd get some results. But things have gotten demonstrably worse, a lot worse, definitely not better. I mean, the very fact that today a middle class lifestyle is unavailable to most families with a single earner, and to many with two earners, stands as testament to the abject failure of conservative economic ideas. But here we are. People take Republican economic rhetoric seriously for reasons about which I can only speculate.

What really drives me mad is that the Democrats, beholden as they are to massive corporate and financial interests for the campaign contributions they give, are unwilling to challenge this false consensus. So who's more responsible? Republicans for peddling what amounts to snake oil, or Democrats for buying it? Personally, I hold the Democrats more responsible. They know better, but value reelection over what's best for the country. That makes them much bigger scum bags than their opposition, many of whom are just deluded or stupid.

I continue to consider not voting at all this November.