Who are the job creators?

[Londoner]

After WWII America created a mass-consumption economy which depended heavily on the purchasing power of the masses. (contrast this with say the Chinese economy which relies more heavily on exports to foreign markets. The American economy, more than any in world history, requires high levels of domestic consumer spending)

When the masses have money to spend: the economy booms, and the capitalist has an incentive to invest, innovate, and add jobs.

The 64,000 Question: what creates high levels of purchasing power?

From the 1940s-1973: purchasing power was created by high wages, benefits, subsidized education & public transportation, entitlements, and a host of programs, regulations, and laws which kept the cost of living affordable. All of these things put more money in middle class wallets, and when there is money in middle class wallets, business does everything possible to capture it. This is why the postwar economy - during a time of high taxes and high wages - grew more than any other in American history: because the New Dealers made sure consumers had massive amounts of money (…unlike 3rd world consumers who were paid pennies a day)

Put another way, the financial gains resulting from rises in productivity were not channeled to a small group of global investors, but broadly shared with working consumers. An unstated contract between capital and labor formed: business would pay workers enough to consume the cars they built.

BUT… eventually business got tired of the tax and regulatory obligations they had to the postwar mass-consumption economy. They wanted cheaper operating conditions - lower taxes, less regulations, and cheaper labor. They were sick of paying exorbitant middle class labor & entitlement costs. They were sick of anti-trust laws which subject their investments to the rigors of competition. They were sick of having to protect drinking water. They were sick of the universe of compromises they had to make in order to put more money in middle class wallets. So they started investing heavily in the Republican Party … and they waited for the right moment.

1973-1980: Oil Shocks & Stagflation: the staggering economic growth of the postwar years finally came to end. Business FINALLY had their moment, so they started heavily funding the "supply side" movement and investing in a skilled mouthpiece, Ronald Reagan, who was sent to Washington to convince America that tax breaks, deregulation, and cheaper labor costs would, by boosting profits, trickle down to jobs, benefits, & cheap prices, i.e., purchasing power. Reagan also said we needed to end entitlements and publicly subsidized education/transportation because these things resulted in higher taxes on the job creators. And while you're at it, we need to get rid of anti-trust laws because we don't have to worry about mega-mergers, consolidation, and too-big-to-fail monopolies. In short, "trust business to regulate itself and make us all richer. This will work! Don't worry, it's not going to result in a system which creates a few billionaires while impoverishing everyone else. Trust the job creators".

So we listened to Reagan and got rid of all the postwar supports for mass-consumption. We replaced government regulators (charged with protecting consumers) with businessmen (intent on creating corporate-friendly rules). We lowered labor costs (by reducing wages and benefits across industries). And [behind the scenes] we gave capital more & more mobility to seek cheaper labor overseas. We made cuts to publicly subsidized education, transportation, and a whole host of middle class programs . . . all for the purpose of giving tax cuts to the job creators. We completely divested in the middle class consumer, and invested in business (w/subsidies galore). We were told these things would trickle down to mass consumption. "You just wait, the middle class will have solid jobs and sufficient cash to keep our consumption economy afloat".

("Oh, and by the way, we're going to financialize the economy and move investments from productivity & manufacturing to financial services. Trust us. This won't become a derivative ponzi scheme. It won't become a speculative casino with bailout insurance. We're the job creators!")

Solid jobs trickling away. Consumption slows. Enter Credit Card Nation: when the Reagan trickle-down failed to result in better jobs, higher wages, and increased purchasing power for the middle class - when American jobs went to China in droves - the mass-consumption economy was put at risk.

With solid jobs disappearing, where would we get the consumer demand promised by the Reagan Revolution? Answer: Master Card, Visa, American Express, and no-money-down! Starting in the 80s, Americans received 3 credit-card-offers a week. Household debt exploded to the point where we spent $1.27 for every $1. America went on a 30 year spending orgy. "Morning in America" was subsidized by a straightforward expansion of credit, i.e., debt.

2008 Meltdown: The end of debt-based consumption If you try to sustain consumption and living standard with debt, eventually you hawk everything in sight, including the last asset left: your home. Now we are stuck in the biggest ditch ever. Consumers don't have the wages/jobs to support mass-consumption, and they can no longer borrow at near the levels necessary to keep the economy afloat. Game over.

The job creators have access to all the world's labor and consumers - they don't need the American economy, they can go to whichever economy has solvent consumers. They are sitting on more cash than at any time in history. More importantly, they won't invest a dime in American job growth until they have consumers. Unfortunately, starting in the 70s, they got rid of the support system for mass-consumption. And in 2008, they're risk mismanagement destroyed the credit market - and now they can't even lend American consumers enough money to buy their stuff. Worse: because of all the cash stuck on top, Wall Street has an unmanageable surplus of investor demand, all demanding high returns - which has lead to the invention of asset bubbles and ponzi schemes.

Where are the real job creators? They're waiting for the return of something essential to mass-consumption; they're waiting for something that truly is too-big-to fail: the middle class consumer.

American Economy R.I.P.
1945-1973

 

[Samson]

My 15 year old son could claim to be a "freelance writer."

Could he actually make a living at it? (If he's actually writing, encourage him to keep at it.)

Lawyers and doctors are also service workers, if those occupations don't engage your prejudices to the same degree. Or you might also look over all of what I posted, instead of cherry-picking something. Just a thought.

Here's just another thought: It's not surprising that you've had to retreat from comparing the "typical" manufacturing job with a service job to a professional service occupation.

 

[RDD_1210]

You keep giving me these examples from the supply side! What the hell is wrong with you? Seriously. Are you just not smart enough to be able to grasp that is not what I am asking you? Just tell me. It's ok. At least it would clear things up as to why you insist on ignoring what I'm actually saying.

You are not sharp enough to grasp the fact that you are asking me to provide an example of a black Camero that isn't black. I've already explained countless times that I can provide an example of a logical contradiction in physical form.

Business CAN create a demand, but it is not a guarantee. If I decide to build 5,000,000 triangles that I decide will be good to sit on top of the tv, it doesn't matter if I have the capital, the facilities and man power to make my triangles. If the consumer doesn't want them, they will not buy them. I will be forced to stop making them and lay off my workers.

Yes, there are businesses that create and a new product and it becomes wildly succesful, but that decision is made by consumers through their purchasing of the product. The producer of the product does not get to dictate the demand.

Now back to what my point was from the start.

Irrelevant blather.

If the consumer market has a need for a product, a business can and ALWAYS will attempt to step up and meet that need. Why? Because the guess work about whether or not it will be successful is greatly diminished. They know they have buyers lined up. They just need to meet that need.

Your only evidence for that claim is that someone invented every product that is currently being sold. You're begging the question. No company every knows that a new product will have buyers. Such claims always come after the product has already been successful in the market. They are claims based on 20/20 hindsight.

In both of the scenarios above, it is the consumer who decides what the need is. It is the consumer who dictates the direction of the economy.

That's more irrelevant horse manure.

You probably shouldn't have even bother responding. Your complete lack of understanding is on full display in your pathetic "response" and dismissal of what the entire topic is. Well done. Go back to sleep sheep.

 

[Londoner]

What do people think about the financialization of the American economy, specifically the transition from postwar middle class manufacturing jobs to post-Reagan financial service jobs...? Have we created an overly-speculative investment economy de-coupled from Main Street job growth?

Our old mass-consumption economy was built around solid middle class jobs, solid benefits, entitlements (which free'd up more consumption money), and a low-cost-of-living sustained by strong consumer protections against monopolies. That model is dead.

We no longer make anything here, and consumer protections have been replaced by self-regulation. The wages of American workers have gone down or remained stagnant for decades. Genuine wage based demand is gone. We keep throwing tax cuts at the wealthy, and they keep realizing massive economic gains, but demand and jobs keep dying (which is why consumers have to go into debt to stay afloat). Maybe we should check under the hood of Reaganomics and see if it's still working? Maybe our wealth distribution is out of whack, e.g., too much surplus capital on the investment side, but not enough demand on the consumption side to incentivize investment in the real economy, which means there is increasing pressure on the surplus capital to seek higher returns from speculative games - hence the Wall Street casino, e.g., play the bubble on the way up, then get out before it crashes on the schmucks. If you don't get out in time, than your government monkeys will bail you out with guess whose money - the schmucks.

Has anyone researched our transition from high-wage jobs to no-benefit retail jobs - basically: shopping-mall-jobs used to sell stuff (made in other countries) to consumers whose ability to purchase is made possible through unsustainable debt. What if we woke up one day and discovered that our economy was built atop big box energy sucking shopping malls in spread-out suburbs, requiring massive amounts of cheap energy - which is gone? What if we built our post-70s economy out of credit cards and cheap oil? And now, having spent 30 years misallocating resources away from solid domestic job growth, the only thing left is financialization, i.e., making money from money.

Has anyone studied the financialization of the American economy . . . and the ways it impacts domestic job creation? Where is all the money on top going? Has the nature of investment changed? Where does the unprecedented surplus capital trickle? Does it go into American jobs? Have we created a system of financial gimmickry where profits function inversely to job growth? What if the job creators are lying? What if they've become insanely wealthy by getting rid of jobs and speculating the American economy into a black hole?

Here is one article about the financialization of the American economy, though there are many...
Financialization, the major new economic trend

 

[bripat9643]

Everyone likes to bring up the old days as proof for our high taxes vs our economy. Yet they leave out all the other factors such as our manufacturing base. It's comical.

They also ignore the high marginal tax rates imposed at the beginning of the great depression. According to liberal theory, tax rates had nothing to do with prolonging the great depression. It was the greedy businessmen who refused to hire anyone.

 

[bripat9643]

In response to your new claim, I will point out that from 1940 to 1980 the top marginal income tax rates in the U.S. ranged from 70% to 92%. That was not accompanied by either low rates of hiring or low incidence of entrepreneurship.

But it was accompanied by the greatest incidence of prosperity for the middle class.

those same tax rates existed during the Great Depression. Why didn't they create prosperity then?

 

[bripat9643]

You probably shouldn't have even bother responding. Your complete lack of understanding is on full display in your pathetic "response" and dismissal of what the entire topic is. Well done. Go back to sleep sheep.

This must be your way of telling us that you're giving up.

I accept your surrender.

 

[Foxfyre]

What do people think about the financialization of the American economy, specifically the transition from middle class manufacturing jobs to financial service jobs...? Have we created a overly-speculative investment economy de-coupled from Main Street job growth?

Our mass-consumption economy was built around solid middle class jobs, solid benefits, entitlements (which free'd up more consumption money), and a low-cost-of-living sustained by strong consumer protections against monopolies. That model is dead.

We no longer make anything here. The old job model has been gone a long time. The wages of American workers have gone down or remained stagnant for decades. The ingredients of the mass consumption economy are gone. Genuine wage based demand is gone. Why do we keep talking about American job growth when investment no longer seems tied to it?

Has anyone researched our transition from high-wage jobs to no-benefit retail jobs - basically shopping mall jobs used to sell stuff made in other countries? -large big box energy sucking shopping malls in spread-out suburbs, requiring massive amounts of cheap oil....

In short: has anyone studied the financialization of the American economy . . . and the ways it impacts the "job creator" issue? Where is all the money on top going? Has the nature of investment changed? Where does surplus capital trickle?

Here is one article about the financialization of the American economy, though there are many...
Financialization, the major new economic trend

Yes there have been many comprehensive and in depth studies, not the least of which are embodied in the writings of Shelby Steele, Walter Williams, Thomas Sowell, fellows of the Hoover Institute, The Heritage Foundation, and CATO, all of which are pretty well blown off or ignored by the mainstream media because they have conservative or conservative libertarian leanings.

The conclusion almost all of these sources agree on is that the more government meddling, macro and micro management of the economy, and interference with the free market that goes on, the more you see unintended negative consequences manifested.

If the government would secure our rights and then get out of the way, as the Founders intended, and allow the American people to govern themselves again, we would again see a resurgence of a strong middle class and almost certainly would see the manufacturing jobs coming back. A government that subsidizes lack of success and punishes success, however, will see more of the former and less of the latter.

 

[RDD_1210]

You probably shouldn't have even bother responding. Your complete lack of understanding is on full display in your pathetic "response" and dismissal of what the entire topic is. Well done. Go back to sleep sheep.

This must be your way of telling us that you're giving up.

I accept your surrender.

I laid out plain scenarios for you and you gave a lame, no thought response. What else am I suppose to do? Obviously you have no interest in listening or discussing like an adult so sure, I give up.

 

[bripat9643]

I laid out plain scenarios for you and you gave a lame, no thought response. What else am I suppose to do? Obviously you have no interest in listening or discussing like an adult so sure, I give up.

All I hear is the clucking of a chicken.

You could try posting valid logic rather than contradictions.

 

[NYcarbineer]

So if the government is in fact a 'job creator', when Republicans talk about not hurting the 'job creators', as they like to do,

but then the next minute they're talking about shrinking the size of government,

they're being a bit contradictory, no?

 

[Full-Auto]

So if the government is in fact a 'job creator', when Republicans talk about not hurting the 'job creators', as they like to do,

but then the next minute they're talking about shrinking the size of government,

they're being a bit contradictory, no?

Nice!!!

The Stretch Armstrong tactic.

 

[Foxfyre]

So if the government is in fact a 'job creator', when Republicans talk about not hurting the 'job creators', as they like to do,

but then the next minute they're talking about shrinking the size of government,

they're being a bit contradictory, no?

No contradiction when you don't find conservatives saying that government is a 'job creator'.

But the government is not a job creator except for creation of government jobs. And every nickle paid to a government worker, however worthy and necessary that worker might be, is money that is taken out of the private sector and is therefore not available to hire or pay people or increase their wages and benefits in the private sector. So government jobs will mostly offset private sector jobs with no real net increase of jobs.

When the private sector creates a job it does not require any contribution from taxpayers or anybody else--only the employer. Admittedly in competition for business, the more attractive business may lure customers away from somebody else which could affect that somebody else's ability to hire, but that is relatively rare. The private sector produces a net increase in permanent jobs. Not the government.

 

[clevergirl]

Researchers from the World Bank showed that higher corporate taxes are associated with lower rates of new business entry across countries. (This finding is particularly bad news for the United States, which the Organization for Economic Development and Cooperation found had the second highest corporate tax rate of the 30 countries its researchers examined.) And several studies show that countries with higher marginal personal income tax rates have lower rates of self-employment.

more

I would need to do considerable study of your linked material to critique it properly. At first glance, it looks like purely an exercise in economic theory without any real-world data to support it. As such, it's not really a refutation of what I was saying.

As for your own post above, you have switched goalposts here. What you said earlier is that if taxes are too high, existing businesses will not hire. What you are saying now is that higher taxes discourage entrepreneurship. These are not the same claims.

In response to your new claim, I will point out that from 1940 to 1980 the top marginal income tax rates in the U.S. ranged from 70% to 92%. That was not accompanied by either low rates of hiring or low incidence of entrepreneurship.

Yes, you do that... The research has been done- THAT was why I linked it.

As I am sure you are aware- very few people paid those rates, as the money was invested off shore... which caught up to us, economically speaking, in the 70's. In addition WWII was a manufacturing boon to the middle class that lasted long into the 50's and 60's.

 

[Londoner]

Using the word's "job creators" is ... a simplification.

We are lead to believe that jobs magically spring from wealthy innovators, provided we move government out of the way, i.e., lower the tax and regulatory burden placed on capital.

Here is the problem. Those innovators crave big government meddling. Energy companies want Pentagon support for their foreign supply chains; they want subsidies for their domestic energy grids & refineries. Weapons companies lobby intensely for taxpayer funded no-bid contracts. Drug companies want government protection in the form of patents and the removal of foreign competition; they want no-bid access to medicare spending (-did you see the 2003 Republican Drug Bill? It is the perfect example of how the private sector merges with Big Government to fleece the tax payer). Financial companies want government supplied FDIC insurance so they can attract more customers and take more risks on the public's dime. All businesses benefit from publicly funded law enforcement which protects their property. They also benefit from an expensive legal system which safeguards their transactions. Banks crave cheap Federal Reserve money so they can loan it out at high rates and make a killing.

The fucking Southwest and all the profit made therein would not exist without the Hoover Dam. And what about Eisenhower's interstate system, which created a more efficient way for businesses to move goods across the country (...and what about the entire network of roads, telephone lines, water delivery and treatment facilities, or the fact that big government put our WWII Veterans to work building modern suburban America, the shoulder's on which business now stands)

Commercial aviation or agro-business would not exist without massive public subsidies. Study the history of Boeing, specifically its relation to Big Government. Indeed, look at subsidies down the line, especially biotechnology. While you're at it, look into the consumer electronics technology that came out of the Cold War Pentagon and NASA budgets. (The whole computer and internet revolution didn't spring magically from Bill Gates' loins; rather, it came from a complex partnership between government funding/research and the private sector)

And let's not talk about the insanely expensive GOVERNMENT SUBSIDIZED infrastructure of the modern industrial state, without which commerce would not exist.

Does Fox News talk about the lobbying dollars business invests in government? The private sector doesn't hate government, it craves government protection, subsidies, and bailouts.

Does Fox News talk about the public legal expense associated with maintaining just one Futures market? The number of supports that government provides to a very willing private sector is beyond belief. Because business and government have had such a deep symbiosis form the beginning, it's hard to tell where one ends and the other begins. If the Tea Party wants to protest government, they should just find a large Corporation, which funds and literally staffs government.

When I hear people talk about moving government out of the way, I feel like I'm witnessing a soldier who has been trapped on an island for so long that he doesn't know the war has been won. Meaning: movement conservatism has convinced a whole generation of voters that it's the 20's and we live in Ayn Rand's Russia where Stalin stole her family pharmacy. I feel like grabbing these knuckleheads and saying "the war is over you morons. The Pharmaceutical company now owns the Government. What do you think the 1 trillion in lobbying $$ is for. Who do you think staffs the Federal Reserve? It's Wall Street you idiots. The private sector owns all major levers of power"

I also feel like reminding these people that we don't live in the Edinburgh of Adam Smith's youth, which is smaller than AIG's workforce. The businessman is no longer - as Ayn Rand said - part of a persecuted minority. He now owns Washington. It's almost like we voters exist in a hermetically sealed talk radio Fox News bubble which doesn't allow us to see who really controls Washington.

And please stop with the simplistic garbage that all of us already know, about how high taxes move resources from the productive to the lazy, and how high taxes discourage investment, and how high taxes merely get fed into wasteful government bureaucracies - a monster which feeds only itself, suffocates the real economy, and builds bridges to nowhere. And how price controls get incentives wrong, and how the minimum wage causes unemployment, and how Welfare undermines work, and how attempts by the Fed to increase employment past the natural rate of unemployment leads to inflation (and hurts the very people you're trying to help), and how FDR prolonged the Depression, and how LBJ's war on poverty merely lead to the unintended consequence of creating a whole new class of government dependents, and how environmental regulations cause manufacturing jobs to be shipped away. We get it. Everybody read uncle Milty in college.

But we also get that job creation doesn't come from a magical deity called Job Creator, but an extremely complex partnership between business AND government. Worse: the current business sponsored war on government completely misrepresents the partnership. It wouldn't be such a big deal if the misrepresentation was only circulated amongst a small band of illiterate morons, but such is not the case. Mainstream conservatism lives wholly inside a bubble which suppresses the private sectors dependence upon, and control of government. This means 1/2 the population is misinformed about the problem.

I'm not saying that the supply siders and small-government-crowd are without merit. Quite the opposite. In the 70s - after 40 years of liberal hegemony - they had the right questions: how do we get government out of business? How do we unchain the productive powers of capitalism which had been so completely stunted by government which lacks the necessary information and incentives to manage the economy. Secondly, instead of swimming upstream like the Soviets, how do we reward & reinforce innovation and thus align incentives with self interest? Indeed, these questions helped us move government out of the way: now all the regulatory agencies are staffed by industry insiders ("who know best"). In the 70s, supply side economics made sense. Lowering taxes from 70% and deregulating transportation and communications worked. But, now we have a new problem: how do we get business out of government? Our politicians have been bought and sold, and they are handing out unregulated derivative markets, bailouts, and monopolies like candy. We've gone from incentivizing job creators to incentivizing reckless speculators.

At some point we need a post Chicago School discourse to emerge. We've been trying the same stuff since Reagan. As a result, we're giving massive tax cuts to Goldman Sachs employees who, in exchange for destroying the economy, are able to give their pets better health care than the poor. We've got incentives all wrong, and our only solution is to give job shippers more tax cuts, and more latitude to system-destroying risk takers. We're clearly out of fucking bullets. We need new thinking.

 

[flacaltenn]

My 15 year old son could claim to be a "freelance writer."

Could he actually make a living at it? (If he's actually writing, encourage him to keep at it.)

Lawyers and doctors are also service workers, if those occupations don't engage your prejudices to the same degree. Or you might also look over all of what I posted, instead of cherry-picking something. Just a thought.

Since service jobs include MOST of the professions -- you can be sure that "in general" they require more skill than factory line workers. Especially because the elite section of service workers, like doctors, lawyers, writers, even entertainers and sports figures have to operate in a duel role as business people also.. But that brings up a more important point -- that same elite percentage pulling down HUGE incomes -- don't create many jobs..

Another effect that I'm certain is true is that the wealth gap and income gap in the SERVICE industries FAR EXCEEDS that of the total economy. Largely because the elite talent is waaaay over-represented in the Service industry.

 

[flacaltenn]

Everyone likes to bring up the old days as proof for our high taxes vs our economy. Yet they leave out all the other factors such as our manufacturing base. It's comical.

Manufacturing output today in the U.S. is higher than it was in the 1960s.

I've seen those studies -- they use assumptions about the "content origin" of the output that allows our Manufacturing output to include goods that were largely foreign made. The thing that counts is whether capacity is increasing or decreasing. NOT UTILIZATION % -- because that doesn't tell you nuts about the size. But capacity does...

 

[flacaltenn]

The more important question is not "who ARE the job creators" -- but "who WILL BE the job creators".

We need to do what our political leadership is NOT doing. And that is to look 20 or 50 years into the future and prepare America to compete and survive economically. That's not gonna happen with us "servicing each other" while the rest of the world dirties their hands and environment to make all our daily needs.

When you read spunky futurists like Michio Kaku -- the very definition of a job and a job creator is gonna look alien to most people living today.

Job creators won't be coming from the HS dropout ranks or even folks that don't make a lifelong commitment to learning. You won't be done academically just because you have "a degree". They won't be coming from the anti-Capitalist types who think economic growth is unsustainable and bad. They won't be coming from folks who think business is greedy and corrupt.

We need to look at things like out-sourcing realistically and see that the bigger "threat" to full employment is NOT CHEAP LABOR -- but how humans adapt to automating more and more of the menial robotic work that we are doing today. Because that train has left the station. And WE for the most part are worried about the wrong things..

 

[Foxfyre]

I always reserve the right to revise and extend my remarks here.

And I would like to revise my previous remarks to include one instance in which government IS a facilitator of private sector job growth, and that is in the legitimate and Constitutional government role to provide the common defense.

As a result of government initiatives in that regard we have an intricate and useful interstate highway system that is of incalculable value in private business moving goods and services around the country and provides lots of good permanent private sector jobs maintaining it.

Along those same lines, government contracts with the private sector to build and maintain other NECESSARY defense installations has provided additional jobs in the private sector without excessively drawing resources from the private sector.

Government initiatives to harness and effectively utilize nuclear power to strengthen the national defense has morphed into many private uses from nuclear energy to light, heat, and cool our cities to nuclear medicine to radium enhanced watches and other instrumentation.

The research and development of technology in the NASA Program to beat the Russians to the moon and additional space research has provided so many new private sector products, light weight construction materials, and innovations from nutritional dry packaged food and drink mixes to satellite communications and countless others too numerous to mention.

All this is to say that we conservatives do not see government in its proper role to secure our rights, promote the general welfare, and provide the common defense is not a bad thing. I hope we keep the space program going and forge on to visit Mars and Venus and other unknowns out there. I just don't want the government doing ANYTHING that can be done more efficiently, effectively, and/or economically by the private sector.