Supply, Demand, and Jobs

Discussion in 'Economy' started by Wiseacre, Aug 21, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    I hear the left saying it all the time around here - increasing consumer demand leads to economic growth and more jobs. It's just that simple they say, except it isn't the whole story. I think more demand is a primary driver, without that nobody hires more people. But then the question becomes how do you create more demand and then how do you create more jobs to satisfy it, jobs that do not disappear in 6 months.

    The liberal approach is to redistribute the wealth - take money from those who earned it and give it to those who haven't, specifically the lower income folks. Sounds great, they'll spend the money and create demand and we get more jobs. Except for one thing, it doesn't work. Tax rebates have been tried, big stimulus has been tried, but it never works because it's temporary. I remember getting a couple of tax rebates during the Bush years, but IMHO it never moved the needle.

    That's because these things are temporary, and everyone knows it. You get a short-lived bump in the economy and then everything goes right back down to where it was before, except now you have another trillion dollars or so of new debt.

    Apparently Obama is about to come out with a new jobs program next month (Sept) which I believe will consist of more spending on infrastructure construction jobs. Sounds great, except it's still a temporary fix, a bandaid that does nothing long term except maybe get him re-elected. So we fix some roads and bridges, which is needed but again those jobs won't be permanent. When the projects are over, so are the jobs.

    Why? Because the underlying problems with this economy have not yet been addressed. Too high taxes, over-regulating, rapidly rising healthcare costs with or without ObamaCare, rising energy costs with no national plan to fix the problem outside of ridiculous ideas of renewable energy sources that are not financially feasible. And a miserable housing sector, most people consider their home to be the foundation of their wealth. And then there's the EPA and NLRB and who knows what else, government is supposed to work with the business community to compete with the rest of the world, but our government is in opposition to businesses instead.

    Until all of that changes there will be no real recovery that can last very long. Increasing demand is not enough, it ain't that simple. That increase has to be permanent and sustainable, there has to be a change in attitude that no gov't program can provide by itself. People have to believe that the future can be better, right now such is not the case.
     
  2. peach174
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    peach174 Gold Member Gold Supporting Member Supporting Member

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    You can't have demand when the people don't have the money to buy.
    redistribution gives those that need it, to spend for gas and food, but nothing else. Still not enough money to really help with anything else.
    You still can't buy other things.
    The people in charge right now don't get it.
     
  3. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    True, but giving people more money does not mean they will spend it. Of course they will pay their bills, but discretionary spending will be curtailed as much as possible until the future looks brighter. I suspect many people are worried about their jobs, or that their hours will be reduced or wages cut. For sure demand is not going to improve significantly through a redistribution of wealth. Not enough money for that.
     
  4. sparky
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    sparky VIP Member

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    let's see if we can take this a step higher>
    Supply-side economics - Wikipedia, the free encyclopedia

    Keynesian economics - Wikipedia, the free encyclopedia
     
  5. expat_panama
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    expat_panama Silver Member

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    The fact that people can remember what they want allows opinions (humble and otherwise) to differ from reality.

    Actual unemployment peaked at the horrible Bush recession high of 6.3% when the tax rate cuts were passed, and unemployment proceeded to fall to a low of 4.4 just before the 06 congressional election. Now with the Obama tax hikes unemployment's been double digit.

    Opinions based on reality can earn more respect than fantasy.
     
  6. editec
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    editec Mr. Forgot-it-All

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    We've shipped 30,000,000 industrial jobs offshore in the last 40 years and we wonder why the economy is on the skids?

    The real stimulus policy that will work is spelled T-A-R-I-F-F-S
     
  7. Sallow
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    Sallow The Big Bad Wolf. Supporting Member

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    Wealth extractors don't earn money..they steal it.

    TARP was one of the biggest examples of that. It was authored by conservatives for the wealthy.

    Time to stop this crime.
     
  8. Sallow
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    Sallow The Big Bad Wolf. Supporting Member

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    I don't trust Bush's numbers at all.
     
  9. RandomVoice
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    RandomVoice Rookie

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    The financial crisis wasn't caused by high taxes (what high taxes anyway?), it wasn't caused by business strangling regulations or the EPA or Obamacare any number of other bogeymen that get trotted out time and again to try and blame for the economy.

    You are right on a few things, stuff like short term infrastructure projects, temporary tax cuts, stimulus spending etc are mostly short term fixes. Nobody thinks otherwise. The point of this sort of thing is to soften the blow of the crisis, speed up the recovery, to give the economy energy and time to get back to good footing with the minimum of damage.

    What exactly is wrong with this? You want the government to act to try and stem the tide when the economy is crashing, and you want it to try to push the economy into recovery. This is sensible policy.

    The problem really with trying to inject stimulus in a number of ways into the economy, either through tax cuts or various spending or stimulus packages, is this... The fundamental idea behind this sort of deficit spending during hard times is that you under spend during the good. Governments for decades have failed to do this and the deficit has grown large enough now that the federal government is handicapped in any measure it wants to take to try to act.

    You are complaining about short term fixes? You should be begging for short term fixes. Right now half a percent growth plus or minus will make a huge difference to millions of Americans. Now is the time for short and medium term action.
     
  10. edjax1952
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    edjax1952 Member

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    These are a good and fairly comprehensive basis of debate for this subject of stabilizing the American economy.

    One of the largest obstacles that I see in long term stabilization is the lack of American Products. In order to keep the money flowing inside the US, we need to make it easier for American entrepreneurs to produce a product here inside of our borders. At present, too much money is exiting our economy due to import of goods not available here. How difficult is for the average consumer to find goods he needs that are made in America? How much of the food we eat is imported?

    If American businesses did not have to contend with government regulation of almost every aspect of their business and farmers were given a more level competitive edge the money could stay here instead of sending it to other counties. We do not want to edge out foreign goods completely or make them unobtainable, but we do need to level the playing field for Americans to produce consumer goods.
     
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