Does Demand Create Jobs? Well Sorta

[Norman]

a tax cut on SS taxes would work as well as a rebate check for a demand stimulus etc.....

the poor and middle class SPEND their 'stimulus' tax savings the fastest, is what all the studies have shown....stimulus is not really a stimulus if it is not all spent and concentrated within a short period....yep, the obama stimulus was definitely not all stimulus....because it was spread out and piece-meal.

*rebate check would be more effective, but tax cuts could work too

This has been explained many times.
Sending people money does nto create demand or jobs. There is no "multiplier effect."
We have just had about 3 years of this experiment (again) and the results are that such thinking is wrong, totally wrong.
The truth is that investment creates jobs. How much demand was there for a Kindle before the first one was sold? Answer: Zero. Same with an iPhone or any other gadget. first there was an idea, then an investment to develop, produce and market. Finally there was demand.
But unless companies perceive a business atmosphere that is favorable to risk taking, they won't do it. And that is what we have right now.

But if nobody has money for a Kindle, why would anyone bother developing, manufacturing, and marketing it, regardless of how much capital they have access to?

If nobody has money for kindle, why should kindles be produced?

Should we also dig and fill ditches? Create demand for that kind of service?

 

[expat_panama]

...Stores and factories are built not because of existing demand but for the demand expected to be there when the activity hits the market.

Yeah, but they also expect you to PAY for that demand. Not just demand stuff....

lol! --wait, you were joking right?

Seems the reality were getting to here is that "demand" won't cause economic activity if what we're really talking about is simply 'need'. If we're talking about demand as in supply/demand setting a market price, then we're talking trade --we're talking about buyers and sellers.

Someone in need can only become a buyer if he or she has something with which to trade, be it labor, crops, goods, whatever. This is economics, and anyone thinking this approach is too 'money-oriented' can take it up on a religion thread.

 

[Wiseacre]

The problem with the lefty pov is that they don't seem to realize that demand by itself is not enough, you have to have capital to start new businesses or expand existing ones. And that requires rich people to back somebody with a good idea, and a reasonable expectation of a decent return on their investment. It all starts with demand but does not end there.

 

[uscitizen]

Not just a reasonable return on investment, but a maximum return on investment, That is why many things are manufactured in China now.
And also why we have call centers and such in India.
the average American must learn to settle for less while the corporations get more.

 

[Care4all]

The problem with the lefty pov is that they don't seem to realize that demand by itself is not enough, you have to have capital to start new businesses or expand existing ones. And that requires rich people to back somebody with a good idea, and a reasonable expectation of a decent return on their investment. It all starts with demand but does not end there.

Yes, it does require capital....and the guy with the good idea, product and marketing plans for the product, with supporting analysis that shows the projected rate of sale based on similar items in the market, will get his financing/capital.

In general, there is no need in a "free market" for a tax credit/break or corporate welfare to make this happen....imo.

Care

 

[The Rabbi]

Yup. Exactly. There is no need for a tax break.

So why is Obama giving tax breaks right and left for "green energy" projects????

 

[Care4all]

...Stores and factories are built not because of existing demand but for the demand expected to be there when the activity hits the market.

Yeah, but they also expect you to PAY for that demand. Not just demand stuff....

lol! --wait, you were joking right?

Seems the reality were getting to here is that "demand" won't cause economic activity if what we're really talking about is simply 'need'. If we're talking about demand as in supply/demand setting a market price, then we're talking trade --we're talking about buyers and sellers.

Someone in need can only become a buyer if he or she has something with which to trade, be it labor, crops, goods, whatever. This is economics, and anyone thinking this approach is too 'money-oriented' can take it up on a religion thread.

there is the business word of "demand" and the every day life meaning of it and I think Norman might be taking the word in the wrong sense....demand in the market place means BUYERS as you stated or "projected buyers"....yes, it is guesswork to project "demand" but it is not done in a vacuum, there are solid figures than can be analyzed that give those that "see the future" a pretty solid handle on what the rate of sale will be for the new item hitting the market more often than not....sure, we are wrong occasionally, but for the most part, we are correct.....and the wheel continues to turn....the business, stays in business.

Besides that, we build margins in to all the product, that 'handles' our let downs, our mistakes...pays for our markdowns.