Jobs and the Economy – some thoughts

I’ve only really been partially aware of the Occupy Wall Street movement (mostly through tweets, facebook and those couple of Daily Show bits).  I’ve been reading other stuff a lot recently (I’m in the middle of 5 different books, none of them about politics), so I haven’t kept up with current events.  And with the depressing Longhorn loss to Oklahoma and the slightly less depressing loss to Oklahoma State (we at least made a game of it), I’ve not watched much news.  But the little bit that I’ve been watching got me thinking: People really don’t understand the world they live in.

Take the Economy.  The Economy is this super complex thing that depends on:

  1. How much people spend on things they don’t need.
  2. How much people are willing to bet (via the stock market) on how well a company’s doing.
  3. How much profit a company makes – which relates and effects number 2.
  4. How many people have jobs – which relates to and effects number 1.
And these are just the 4 things I actually understand.  There are even more things at work like how the dollar trades against the Euro, rice production in China, labor costs in India, etc.  Each having an effect on how our economy is doing.

Our Economy is not doing well and the problem is we don’t have the best minds trying to figure out how to fix it.  I’m not saying our politicians are dumb, I’m saying they are working to get elected not solve problems.  I hate how cynical that sounds, but it’s true.  How can anyone be serious about fixing, even something as simple as, our budget if you aren’t willing to consider certain actions?  “I’d do anything to fix the budget, but I ABSOLUTELY won’t consider a minor tax increase that only affects less than 1% of Americans.”  “I want to fix the budget, but I REFUSE to even take a look at where money could be saved in Medicare and Social Security.”  That’s not the talk of serious people, that’s the talk of politicians.  And the problem with them is they do what their base tells them, not what is objectively right.  Imagine if your doctor took a consensus before treating your illness, but not from people who studied medicine, from people like you and me.  I don’t want to go to that doctor.

But honestly, what can politicians do about the Economy?  Those four things I mentioned at the top of the page can’t be significantly influenced by public policy.  The people who can make a difference, aren’t working for the best interests of the country as a whole, but for their own.  I don’t mean that to sound as disparaging as it does, it’s a simple fact.  Businesses work to make profit, not better the country.  Making the country better might be a side effect, or even a minor goal of some companies, but first and foremost they are in the business of making money.  And again, that’s not a bad thing, it’s just true.

I’m a flaming-bleeding-heart-liberal, but when looking at where the company I work for could save money, the first things that came to mind were: close 2 stores, layoff lots of employees, & hire new employees at a lower rate.  That is going to hurt and effect a lot of people, but from a business standpoint it makes perfect sense.  Cutting costs is the easiest way to increase profits.  (BTW we didn’t do those things, though I still believe we should).

If businesses hired more people, then more people would have money to spend, then businesses would make more money, which would increase their profits, which would increase their stock prices, which would signal the economy is doing better, which would lead to more spending, economic circle of life, etc.  But for any one of those steps to happen, someone has to hire people and they’re not.

This is why some advocate the Works Progress approach.  Let the government put people to work.  They pay people to do things, then those people spend their money, buying groceries, new clothes, new cars, etc.  Each of those businesses sees an increase in sales, so maybe they invest some of their money in hiring new people, or buying new equipment, both of which put more money in the economy.

See the problem is an economy requires people to spend money and if people don’t have jobs, they don’t spend money on anything but the necessities.  Rent gets paid, but people don’t move into nicer (more expensive) apartments.  Food gets bought, but people don’t spend on higher priced fresh veggies & they don’t eat out.  Clothes get bought at discount retailers not at department stores.  The Economy does not grow.

I do support a WPA style approach to fixing the Economy, and also giving tax breaks to business for hiring new people and keeping them for 6 months or more.  Getting people jobs is necessary and essential to any economic recovery, but jobs are not going to be created when they run counter to a businesses primary goal, which is increased profits.  Make it in a business’ best interest (concretely rather than abstractly) and those jobs will be created in the private sector.

3 thoughts on “Jobs and the Economy – some thoughts

  1. I agree with much of what you said, but not your solution. The government should not be in the “business” of trying to solve problems that are best solved by businesses who are seeking profits. If tax burdens on businesses and individuals were eased, and if the tax reporting burden of many big businesses was eased we would see an influx of money into the economy, in a natural and organic manner rather than what would essentially be a false statistic (the government providing jobs approach). Why not get rid of the U.S. tax codes and go to a national sales tax or a flat rate tax — as an alternate solution.

    1. I do agree that the tax burdens (especially in reporting which costs many man hours) on business should be alleviated, but if you gave my company a tax break we wouldn’t hire more people. We need to sell more products to justify hiring. Sure we’d make more in profit, and maybe give some raises, but we wouldn’t really create any new jobs. That would still put more money in the economy, but not as much as getting the unemployed working. Easing the tax burden on individuals would help, but a flat tax or national sales tax would increase taxes on the poor which would decrease spending. I haven’t checked out how my tax burden would change in a flat tax world or national sales tax world, but that’s all stuff I’d have to research to talk about more intelligently. But if businesses due to a lower tax burden gave raises and the people getting the raises kept more of their money, spending would increase. It would be slow, but more sustainable, I think.

      Thanks for the reasonable comment and for reading.

  2. Why have politicians if they do not solve problems?

    If the government takes care of one person, why not two people, why not everybody? Do people want the government to do everything?

    The government cannot even take care of itself.

    Get real people, change is needed. Eliminate politicians and get problem solvers.

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