Dec 2, 2013
If Not Rich People, or The Government, Who, Exactly, Creates Jobs?
As predicted, when you live in a consumer driven economy, it helps to have consumers who have enough money to spend. So when they don't - what a surprise! - sales 'sag,' or disappoint' or 'fail to match expectations' or any other euphemism you care to choose in place of 'suck.'
Which brings us back to the issue of jobs. Yeah, groan. That again.
More specifically, since we appear to be in general agreement across the civilization that job creation is not what it could be, two questions arise: whose fault is it - and what can be done to fix the situation?
In the 'let's blame someone' category there are two candidates: the government, preferred bugbear of those who claim (and some may actually believe this) that if government would just get out of their way with all those unhelpful taxes and regulations and rules and such, they could then be entrepreneurial, build businesses and creates gazillions of jobs. The second candidate for blame is rich people. Generally and everywhere. Many believe that if they were not so selfish, greedy and focused on buying even bigger houses, executive jets and trophy spouses, purse strings would be loosened, investment would surge and everyone would be happily working like they did in 1973.
The problem with these beguiling but simplistic theories is that taxes and regulations in the US are already at historic lows, the government is shrinking - literally and figuratively - and given the desperation most governments feel to demonstrate some sort of effort to create anything other than more poverty, most businesses can do pretty much what they want, wherever they want to do it. As for the rich people theory, as the following article explains, they rarely create jobs even when they are inclined to do so. Not that they are ever all that interested in the subject.
The real issue appears to be that we have acceded to a financialized economy which routes most gains away from productive investment. We did this knowingly, sometimes gleefully. And now the entire global economy is paying the price. Even the Chinese are losing their mojo as they become more connected to and dependent on the rest of the world. What creates jobs in a consumer driven economy is middle class consumers who have enough money to spend. It's what Disney cartoons call the Great Circle of Life. And whether in fantasy or reality, chickens do come home to roost. JL
Henry Blodget comments in Business Insider: