Post #352,166
12/20/11 8:53:23 AM
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Why "rich people" don't create jobs
Unfortunately, as I explained in detail here http://www.businessi...eate-jobs-2011-12 , this assertion is wrong: Entrepreneurs and investors actually don't create jobs http://www.businessi...eate-jobs-2011-12, at least not by themselves. What creates jobs is a healthy economic ecosystem, of which entrepreneurs and investors are only parts. The more important part of the job-creation engine is a huge base of people and companies with plentiful disposable income. Specifically, millions upon millions of customers with money to spend.
[...]
Without healthy customers, in other words, entrepreneurs and investors can create prototypes, or do R&D, but they can't create self-sustaining jobs. To create self-sustaining jobs, companies need to sell their products and services into a marketplace that 1) wants them, and 2) can afford them. The marketplace also needs laws, law-enforcement, property rights, transportation systems, resources, rules, and other attributes of healthy free-market economies that help companies and society function. Without all those things, entrepreneurs and investors can't create jack.
[...]
If the employees are not paid living wages--if, instead, all the entrepreneurs and investors try to maximize every cent of profit by paying employees as little as possible--the new jobs will not be self-sustaining.
Why not?
Better hope this doesn't happen on Millionaire's Island--the economy will eventually collapse. Click for more on inequality >
Because as soon as the less-wealthy people on the island run through their savings, the money to pay for basic necessities will disappear. The new companies that had been formed to provide houses, clothes, services, and so forth will go bust, and all the jobs will disappear (no customers = no companies = no jobs). The economy will collapse, and the island will be thrown into anarchy.
Importantly, this collapse will happen even if the wealth of the island as a whole still adds up to trillions. If the wealth and income is concentrated only in the hands of a privileged few, there will be no money for the less privileged to pay for any products and services produced by these few. Thus, there will be no point in the rich people producing any products and services beyond what they need to feed and clothe themselves (because no one will be able to buy the products and services). And, therefore, there will be very few jobs.
http://www.businessi...es-island-2011-12
"Chicago to my mind was the only place to be. ... I above all liked the city because it was filled with people all a-bustle, and the clatter of hooves and carriages, and with delivery wagons and drays and peddlers and the boom and clank of freight trains. And when those black clouds came sailing in from the west, pouring thunderstorms upon us so that you couldn't hear the cries or curses of humankind, I liked that best of all. Chicago could stand up to the worst God had to offer. I understood why it was built--a place for trade, of course, with railroads and ships and so on, but mostly to give all of us a magnitude of defiance that is not provided by one house on the plains. And the plains is where those storms come from."
-- E.L. Doctorow
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Post #352,167
12/20/11 10:27:08 AM
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See also: Henry Ford
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Drew
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Post #352,168
12/20/11 10:42:32 AM
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Re: Why "rich people" don't create jobs
Wow was that stupid.
Jobs was not a jobs creator? Really? Part of that creation is the VISION and the willingness to take the risk to implement that vision. His vision created products that had ZERO demand because they did not yet exist. He built a pretty damned large company based on that.
This is what entrepreneurs do. Even the author poo-poos his own VISION that a publication was needed to cover that specific subject, for which there was a demand...thus creating the 75 jobs to implement that vision.
Sure, if not a single person has money to create a market, then a demand economy is going to have a problem. Assuming that all entrepreneurs do not pay a living wage is also stupid, unless he's admitting that his 75 employees work for tips.
Stupid.
Now, if you want to tackle the specific topic that these people need additional tax incentives to create more jobs, that's 1) a more on point discussion and 2) one where I might agree that additional incentives are not necessary...but to simply say that the small business economy does not create jobs is simply an idiotic assertion. Yes, demand is necessary...but in many cases these folks create their own demand set. Its not like there is zero money floating about in this country.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #352,169
12/20/11 11:15:06 AM
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whiff -- whaff -- lookit all that handwaving
not a single person
all entrepreneurs
to simply say that the small business economy does not create jobs
zero money
That's a lot of absolutes you're refuting there. Too bad what the article actually said was:
Entrepreneurs and investors actually don't create jobs, at least not by themselves.
Notice in particular that boldy bit at the end. That's the bit you've ignored in order to refute an argument that wasn't made.
Thanks for playing. --
Drew
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Post #352,170
12/20/11 11:39:28 AM
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apparently not paying attention, are you.
Photo caption on Jobs...not a job creator.
The base assumption is that the economy starts at Demand=0.
This is an absurd baseline assumption (I call it stupid).
Ferchrissakes, the inventor of shamwow found a market...in a "down economy".
Yes, there has to be someone to sell the product to...yes this is a demand economy...but to pretend that the starting point is Demand=0 is, yes Virginia, stupid.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #352,171
12/20/11 11:53:46 AM
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Jobs never created demand
He created desire. That, combined with available funds, created demand. Take away the available funds -- like in the island example -- and there's no demand.
Anything sold to people with no savings by definition can't count as an increase in demand. Unless we increase debt -- which hasn't worked out so well after all, so I'll say it doesn't count -- any money spent on an iPad by someone with no savings is money not spent on something else. It's shifting demand, not creating it.
There are only two ways to increase demand:
1. Increase desire among people with savings.
2. Increase disposable income among people with unsatisfied desire.
And just to be clear ... where exactly in that article does it state anything about demand=0?
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Drew
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Post #352,173
12/20/11 1:26:35 PM
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Re: Jobs never created demand
"Take away the available funds -- like in the island example -- and there's no demand. "
D'uh. That creates the assumption D=0. A stupid assumption.
And shifting demand, depending on where that demand shifts from and to can create net positive jobs.
And your limit of 2 options is woefully inadequate. There are..just to name a few...
3) grow the macro economy
4) increase the population
5) change the tastes and preferences of the population (the steve jobs example, btw)
6) reduce general price levels (especially for staples...the OPPOSITE of what is happening..and one of the places where Krugman is wrong (to leap threads).
Jobs DID create demand. He changed peoples preferences..and did so with Veblen goods (higher demand in part due to higher price...think Gucci)
I'm not disagreeing that a demand based economy needs demand to exist. I'm saying his "millionaire island" concept is stupid..and proves nothing.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #352,174
12/20/11 1:56:47 PM
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?
Grow the macro economy? Isn't that the result of increasing demand? How can that be the cause of increasing demand?
Increase the population. Okay, I missed that one. But with unemployment already ridiculously high, do you really think that's going to help anything?
Change tastes ... so that you increase desire. That was my #1.
Reduce prices of staples. How? Reduce margins? Increase efficiency? Outsource even more? Lay off more people? Not seeing how that helps.
--
Drew
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Post #352,180
12/20/11 4:32:05 PM
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Re: ?
Reduce price of staples...
Let's see...stop using corn to make ethanol. One example. Stop paying farmers not to grow. Invest in agricultural land restoration. Drill, baby, drill. To name a few.
Grow macro...invest in PRODUCTIVE resources (something our gov has failed to do) . Then you pay down the resulting debt with the increase in revenues over time. (see above re: restoration...drilling...cross country pipelines (new add)..all not on table or actively opposed..all net job additions=increased net income=economic growth.) Instead, they've added backdoor bailouts.
And increasing desire or changing and defining taste was your number one with a caveat. Your number one added "with savings". And if you think Jobs never created demand...then how did he sell ipod 1? It never existed prior to his (company's) invention of it. It certainly was not "needed". If you assume his actions netted no demand, then no new invention would ever succeed. If I don't demand it now, then I should not demand it ever. Straight logical progression.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #352,183
12/20/11 4:58:52 PM
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How many times do *you* spend a dollar?
Every iPod sold to people without savings was several hundred dollars not spent on something else. How is that a net increase in demand?
You're mixing micro and macro.
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Drew
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Post #352,182
12/20/11 4:58:35 PM
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Jobs was a millionaire when he started Apple? Really?
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Post #352,184
12/20/11 5:01:40 PM
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he was a millionaire when he rescued a dying company
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #352,186
12/20/11 5:31:02 PM
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He bought Apple personally when he returned? Really?
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Post #352,188
12/20/11 5:44:03 PM
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did you buy your house personally? Really?
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
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Post #352,189
12/20/11 6:10:15 PM
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Have fun in that rabbit hole.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #352,185
12/20/11 5:06:18 PM
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Re: Jobs was a millionaire when he started Apple? Really?
He was when they went retail, for example.
But they don't even allow for that...they simply say he did not create jobs.
Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
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Post #352,187
12/20/11 5:31:49 PM
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He personally put up the money for retail stores? Really?
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