Analyzing World

Analyzing political and economic issues

Archive for February, 2013

Obama worst president ever?

Posted by picard578 on February 9, 2013

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Employers debunk Republican “job creator” myth

Posted by picard578 on February 8, 2013

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Employers don’t create jobs, customers do. This week, business owners themselves exploded the myth that they are the job creators.

Previously we’d offered the argument that businesses don’t create jobs. “Customers are the engine of capitalism and of jobs,” we wrote. “Employees are hired when a willing buyer shows up at the door. Jobs are not created for any other reason.” Now business owners have weighed in to provide corroboration.

Reporting this week in the New York Times, Mokoto Rich interviewed Jeffery Braverman, owner of Nutsonline, in Cranford, N.J.. Even a $4,000 tax cut would not cause him to hire anyone. “You still need to have the business need to hire,” says Braverman. “Business demand is what drives hiring.”

In the same piece Michael Kehs, CEO of Chesapeake Energy, said a tax advantage “does not drive our hiring.” Jen-Hsun Huang, CEO of the high-tech company Nvidia concurred that tax breaks don’t affect his hiring decisions. Like many tech companies, he expects to increase his workforce “by twenty percent this year” based on customer demand.

When businesses are under-taxed, owners take the savings as extra profits. Under taxing doesn’t drive owners—or anyone else—to do civic good. It simply provides unearned income at another taxpayer’s expense.

Business blogger (and small business owner) Jay Goltz puts the final nail in the job-creator coffin. Noting that the people complaining about taxes are the same people who always complain about them, in good times or bad, he writes:

“Right now, my picture-frame and home-furnishing businesses employ 110 people, and they have certainly felt the effects of the recession and the housing meltdown, but if I have a problem it’s not with taxes and regulation. It is that I don’t have enough customers with money to spend. That’s why the most important aspect of the president’s plan is that it would inject $450 billion into the economy.”

Which brings us to part two of the phony right-wing jobs argument. It’s the myth that “certainty” is required for a strong business sector. Any entrepreneur will tell you that just the opposite is true.

World English Dictionary defines “entrepreneur” as someone who “by risk and initiative, attempts to make profits.” Not all business owners are entrepreneurs, sadly, but the most successful are. The highest profits are made when success is uncertain. The most profitable industries rely on uncertainty to give them the “win.” Obvious examples are the fear mongers who pitch gold on talk radio. They rely on economic uncertainty to scare you into buying. They profit from your uncertainty.

When a market segment functions with a high level of certainty, both customers and products are interchangeable. If that happens, vendors can only compete on price. Certainty lowers profits.

Republicans like to blame the bad economy on things they made up—like this myth of “certainty.” However, if they really believed it themselves, they’d compromise to get legislation settled. Yet they choose to obstruct even though obstruction itself is the primary reason for less certainty. It doesn’t pass the smell test.

Glen Greenwald writes eloquently about how business has enjoyed the certainty of low taxes and lax regulation for thirty years. Those years include two major recessions and two major bank bailouts. During the period, the boom came during the Clinton years, when taxes were reasonable and billions were made in our most volatile sector, technology. Technology continues to be one of the few bright spots in our economy (see Nvidia, above.) America’s most valuable company today, Apple, was near bankruptcy just a dozen years ago.

The only certainty in business is that certainty inhibits profits. But if Republicans really thought certainty was so important, they’d stop obstructing everything, wouldn’t they? If certainty was so necessary, wouldn’t it be worth compromising to get it? No, they’re simply arguing about something that doesn’t exist so they can avoid fixing something that does.

In doing so, Republicans conclusively debunk the claim that they are patriots.

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