In bad times, the private sector doesn’t create jobs.
I’m a little tired of the claim that the private sector not the government creates jobs. That’s not entirely true. In good times, that is true. But these are not good times and in these times, the only entity that can stimulate job creation is the government.
Think about it logically. Profit is the motive behind businesses. And you can only create profit by selling something. And you can only sell something if there are buyers. Currently, there isn’t a buying mentality because the economy is tight. Most people are not buying because the income:spending ratio is not favorable. The only thing you buy when money is tight, is necessities.
If there are no buyers, no businesses is going to hire, no matter the tax credits and incentives promised. Unless the incentives and credits are going to give you a profit, you don’t hire. If a business gets a credit of even $30 for every $100.00 in wages, that is not going to make a profit.
That worker might be able to increase your product count, but if no one is buying, you are going to be even further afar from a profit. And no business will do that.
Britain followed the republican plan… cut, cut, cut… and went into double-dip recession (the conservative British government is currently proposing a one-time tax on the wealthy). France right now is currently offering to pay 75% of the salaries of young people who are hired by private businesses for up to a year. While that is not perfect, I’m willing to bet that unemployment (particularly amounts youths) will go down, productivity will increase, spending will increase, the economy is likely to improve.
The United States will never go that way, especially with the republicans blocking every spending and unemployment plan put before them. France is providing the stimulus to create an effective recovery. However what France and Britain is doing, certainly doesn’t do the Romney/Ryan ticket any favours.
Obama had the right idea with the stimulus, but the amount that he was whittled down to, by the republicans and the faint-of-heart in his own party, made the stimulus fail to create a more meaningful impact.
The stimulus was not to increase the size of government. It was to put projects on stream that needed private sector involvement. The government wasn’t going to fix all the bridges in America. The money would have gone to private sector companies. Thus more people would be hired, more money would be in the economy, spending would take place, and the ripple effect would stimulate the economy.
And even if you increased spending by increasing the size of government, then the same effect would apply. More people with money, means more spending. More spending means more jobs to make product and more hires to sell product.
However, if you don’t provide enough fuel, the engine cannot ignite, to use an automobile analogy… and you waste the little fuel you have used.
The republicans also claim that there are too many regulations. I’m sure there are. But you have to differ between meaningless and meaningful regulations. Amongst the regulations that the republicans want to get rid of, are regulations that will protect the rights of employees and the health of consumers. For example, under George Bush, the rules of what define organic foods were watered down to the point that anything labeled organic foods cannot be trusted… with good reason. Most are not organic foods.
The amount of poisons being used in the everyday meal is horrendous even under regulated industries. The republicans main goal is to continue on this path. Its like the deregulation of the banking industry.
Capitalism has become quite predatory. Businesses have zero moral compass. Its about profit at any cost. Part of this thinking is that the more money you have, the more protection you can purchase, the more you can insulate yourself from responsibility. But who will speak for the common man? Certainly not Mitt Romney who is beholden to corporations.
As I write this, I spy a news article about someone who can probably be regarded as the posterchild for predatory capitalism… her name is Gina Rinehart out of Australia and she inherited her wealth… some $19b. Her prescription for the general populace? “If you’re jealous of those with more money, don’t just sit there and complain. Do something to make more money yourself – spend less time drinking, or smoking and socializing and more time working”.
Easier said than done, I would think. what does she think are the causes of Australia’s economic decline? High taxes, high wages, and over-regulation. Sounds familiar? She advocates that taxes should fall, red tape should be cut, environmental rules relaxed, and the minimum wages lowered. This woman should be the guest speaker at any republican convention.
The republicans cannot provide the job creation atmosphere that they claim they can, without tremendous cost to people. And its not likely that they will even try.
What is likely, is that they will have a pact with corporations for higher taxes across the board, but at the same time reduce regulations, reduce all opportunities for collective bargaining and wage increases. And they certainly won’t repatriate jobs from abroad by taxing those companies that ship jobs abroad.
Will there be good days ahead for America? Probably. But certainly not under the prescription the republicans have outlined for the country.
Predatory gas pricing
For an example of how the current market works, one has to only look at the recent jump in gas prices, by up to 15c or more. The prices jumped because the sellers speculated on the hurricane hitting South Florida and causing much damage and gas shortage. But the hurricane didn’t hit, there is no shortage, but the prices remain high. Guess why?