Are Americans naive when it comes to asking the president for more jobs?

That is the debate we are having.

There are a large number of us who believe that the free market is some kind of strange, magical god who will take care of everything if you leave it alone. Kind of like a cult.

Then there are a large number of us who believe that man can harness the free market and make it work for the benefit of all. This line of thinking began in ancient Greece, under a leader named Solon.

The current president has created 3.1 million jobs by assuming he could apply rational principles to the marketplace. The last president lost 8 million jobs by assuming the free market cares about people.

The president himself can do very little, except through executive order. He can ask, and work with congress, to stimulate the market place towards productive ends.

@Imadethisupwithnoforethought the last president lost only 4 million of those jobs. The current president lost the other half.

@WestRiverrat I am tempted to argue, but let’s assume you are correct. The way things are going, I think, based on your calcs, Obama will break even. :)

Yes Americans are extremely naive.
Your once great self sufficient entrepreneurial industrious phase has evolved into a pyramidal oligarchical regime.
As a non American but a cousin I implore you guys to recognise and uphold all that your founding fathers desired.

(Also get a clue on the power that commercial advertisement has over your happiness, be aware of the blinkers placed upon you by total media propaganda and stop being lazy by relying on politicians to solve all your issues.)

Americans are pretty naive, period. And especially when it comes it comes to what the president can and cannot do.

I mean let’s be honest.

I don’t think it is a question of honesty. If hundreds of MBAs and PhDs can’t figure the economic problems out, what can a bunch of anonymous internet posters accomplish?

A person would increase his chances of employment more by learning new skills and by networking that he would writing his congressman or the president or business leaders. Kind of like voting – it is the smallest bang for the buck.

Remember most USA voters cannot pass a fifth grade civics test.

First of all, job growth has been steady and increasing lately.

Second, the President proposed changing the tax laws to favor businesses that employ worker here is the US.

The President can propose legislation that favors job growth and can do some things by executive fiat. He can and has been creating jobs.

@WestRiverrat, the majority of the jobs Obama “lost” were lost right after he took office and before his policies had actually been enacted. That’s a dishonest talking point, and you know it.

Americans are pretty stupid. The President has extremely limited authority in domestic matters. He doesn’t write the laws that would help us get jobs, Congress does. Congress is divided, however, and won’t write any laws.

Americans are also stupid because they claim to “hate Congress,” as if Congress were a monolithic entity. Americans seem to have strong opinions about what kind of laws and policies they’d like Congress to make. For example, Americans support infrastructure spending, payroll tax cuts, and hiking taxes on the rich to pay for the deficit. But they don’t seem to notice or care that one side of Congress supports these policies (Democrats) and the other side has consistently blocked these policies (Republicans).

I actually wouldn’t call this attitude “naive” so much as “willfully ignorant” and “lacking in any nuance.”

@qingu isn’t. Congress the republicans grip on america atm

The key is to ask who spends the money. It is important to note that if money is spent, jobs will be created because people want money. They’ll go after it by making stuff that the spenders want.

Rich people are not spenders. Or they are limited spenders. They are sitting on lots of money they don’t spend. They will not create jobs because they won’t spend money.

Who wants to spend? People who have needs. Who has needs? Poor people, in general. So we need to get money into the hands of poor people who will then spend it, causing people to make stuff to sell to poor people.

There are a lot of poor people, too. So you only need a little bit of money in all of their hands in order to create a lot of stimulus. And hell, put money in the hands of the middle class, too. They want stuff.

One way to put money in poor people’s hands is through tax policy. Tax the rich a lot and the poor not so much or not at all and then either spend the money on programs to serve the poor, or simply give it to them via programs like the EITC. Let them spend it on themselves.

So the President can do that, but he needs to cooperation of Congress, and Congress is owned by the rich, who are stupid and don’t want to be taxes. They do not believe there is a long term benefit to them in stimulating the economy by letting the poor spend. They think they need all the money so they can spend it more wisely. Idiots. Yes, they are rich, but they are stupid, too.

But the President doesn’t even need to fiddle with tax policy. He can find many other ways to pump money into the economy. For some of these things, he needs the help of Congress, again, and for others, he needs the help of the Fed.

The President can try to persuade one or the other or both to simply print money. Then he puts the money in the hands of the poor. This is very tricky, though.

Because when there’s lots of money around, and it chases the same amount of goods—then it drives up prices, and we have inflation. That doesn’t help. However, money also stimulates production. Which puts people to work. You want to put enough money in people’s hands that the inflation you produce is acceptable and most of the money creates jobs.

So you want to stimulate demand for things that it is easy to create new production in. That kind of stimulus creates more jobs and less inflation. If there are ten car factories sitting fallow, and you create a stimulus program for cars, you’ll get little inflation because car companies can easily open up ten new factories and meet the new demand. No inflation. If you keep on pouring on stimulus for cars, the 11th factory doesn’t exist and will take three years to get online. All of sudden you are just pushing inflation instead of creating jobs.

Housing and furniture are things that have low barriers to creating capacity, I think. So you’d want to stimulate demand for those things.

Oil, on the other hand, is a big problem because it is not so easy to expand capacity for a variety of reasons, some of which are political, and some of which are technical, and some of which are resource based. When we are at war, stimulating demand creates a demand for oil, which is hard to get, and we get a lot more inflation than we might at a time when there are no wars or sanctions and all nations love each other.

Also, a modest increase in oil prices are good because it does make if possible for oil companies to make money drilling for harder to reach oil. There’s a lot of that. So oil is a delicately balance economy that lives in a highly volatile world. It will always jump around violently because the factors affecting it are unpredictable. It’s a good investment. There will be times when you don’t make money for a few years, but over the long haul, if you can stand it, you will make a lot of money. Right not would be a great time to invest in energy because the world economy will be kicking back up this year or in the next few.

When you manage a country, you have smart people who can help you understand and balance all these things. You have executive orders you can implement on your own, and then you have to cooperate with the Fed and Congress, which isn’t so easy.

The electorate doesn’t understand shit, mostly. They vote based on very unsophisticated thinking. They vote based on whether the economy is going well or not. If not, they kick the assholes out. If they like the economy, they leave them in. The problem is that they don’t evaluate the Congressional policies, nor try to understand what works and what doesn’t work or why. If things aren’t good, the electorate says we’ll try something else.

This works because most of the economy is not subject to government control. The economy will fix itself over the long run regardless of Federal policy. Government can only affect things marginally. Government can diminish downturns and hasten upturns. It can also slow down recoveries and hasten recessions and make them deeper. The average voter can’t tell what policies have had which result, so they are back to the default of kicking out the assholes as a sign of displeasure with the economy, whether or not the assholes helped or hindered the economy. The impact of government action is largely hidden by the magnitude of the overall economy.

The economy is not really very hard to understand. For the most part, everything works pretty much as you would expect. There are forces that drive economic expansion and forces that drive contraction. Government typically has more control over the forces that drive contraction or place a headwind on expansion.

The more money put into the economy the more expansion. Government extracts money from the economy in the way of taxes and regulation. The higher the taxes, the less money available for expansion. The more regulation the less money available for expansion. Where things get a little confusing is where politicians try to make them confusing. For example, lower taxes result in more money in the economy. But we seem to feel that higher taxes on the rich won’t have any impact on the economy. For some reason that is painted as an exception. The top 20% of income earners account for 40%-50% of all consumer spending. But we are told raising thier taxes will have no impact on thier spending. Seems illogical because it is illogical.

Regulation is another place where we are supposed to believe there will be no impact. Federal regulations currently cost the economy about $1.75 Trillion annually. That is money that is taken out of the economy and produces no additional product or product improvement. We may feel the regulation is worth it but we need to understand the cost. There is a direct impact on the economy and jobs.

Everything the government does will create more or less headwind for the economy. And remember that anytime the government injects money into the economy, they must take it out of the economy to do so. Generally that is a losing proposition.

Regulation is one area that the government can inject money into the economy without taking it out first. If that money is not spent on regulation is will be injected back into the economy as direct expansion or lower prices. Both help to spur growth and create jobs.

It’s not that hard to understand why higher taxes on the rich don’t do all that much to curtail expansion: because the rich only spend a fraction of the money they have.

The top 20% accounts for 40–50% of consumer spending… but they control about 85% of the wealth. Much of the remainder of that wealth is simply hoarded.

This isn’t to say that raising taxes on rich people won’t have any effect. I am ambivalent about raising taxes on rich people now. But I’d rather raise taxes on rich people than on poor people. And eventually someone’s taxes will need to be raised to pay down the deficit.

As for regulations, you have, like always, failed to point out the positive effects of regulations which, for example, save significantly on people’s health costs. An honest assessment of regulation would look at benefits to the economy as well as costs. It’s also pretty stupid to rail against “regulation” as if it were a monolithic entity that can be reduced by turning a dial.

Finally, I notice that you have said nothing about how government spending spurs growth and creates jobs. This also isn’t hard to understand.

@Jaxk The article said that the spending for the rich is topped out, and this is before any increased taxes are placed on them. They have spent what they are going to spend. They have no unmet demand. The rich are a dead end in terms of stimulating the economy. You could let them keep all their income, and we’d see no more economic stimulus from their spending.

Your article also said that any further spending would have to come from other sectors of the economy besides the rich. So I’m not at all sure how you can use it to justify lower taxes. Seems illogical to me. The clear import of the article is that the poor need the money, just as I wrote. It is only when they get more income that we’ll see any further juicing of the economy.

There’s only so much any one individual can spend. There aren’t very many rich people and when they have spent out their eyeballs, they won’t do any more spending even though they are rolling in dough.

The only way to get the economy going is to get money to the poor and middle income people. Or to make them feel secure that if they spend, they will get the income needed to pay for what they bought. They need the confidence that their jobs and income will be there, and then they’ll start spending. I’d rather put money in their pockets than promise it to them, or to force them to borrow it, but that’s me.

@Qingu

That is a bit short sighted. The rich either spend or invest most or all their money. In a “report by the Venture Capital Association Shows that the FDA is driving down the investment in biopharmaceutical and medical devices or driving the investments overseas. This hits both your argument about the rich and the argument about regulation. Unless you’re arguing that it is the poor that make these investments.

@wundayatta

“they won’t do any more spending even though they are rolling in dough.”

You should have told that to Whitney Houston

Crack is whack. lol @Jaxk.

I wasn’t aware that a lack of investment capital was contributing to unemployment, considering American corporations are now more flush with cash than pretty much ever. Can you actually tie this in to employment, Jaxk?

As for your comment about the FDA, again: why are you not talking about the cost benefits of FDA regulation? Such as “not poisoning the public” and the medical bills saved therein? You also, once again, fail to speak in any meaningfully specific way about FDA regulation. It’s not monolithic.

And let’s all remember: the last time I asked you to name a specific regulation you thought should be abolished, you named one that Obama was in the process of abolishing.

The President can’t create jobs, but ending subsidies to companies for outsourcing jobs overseas is a good idea, IMO.

Job creation is the result of entreprenuership. Entreprenuership needs capital and freedom of action to florish. Capital comes from organizations and people who have acculated wealth, Freedom of action means less government regulation.

So… less government regulation, plus easily available capital, plus people willing to take on the risk of starting a new business = more jobs. The only thing a government can do is tax people, give one person’s money to another person, and pass new regulations.

You decide which is better.

@CaptainHarley, interesting theory. Let’s test it in the case of Apple.

Steve Jobs’ entrepreneurship made that company. Job creation? Almost entirely in China. Capital? Well, Lots of people invest in Apple stock, but Apple has more cash than many countries, and they aren’t putting it into US jobs.

As for “the only things government can do,” I notice that you, too, conveniently left off spending on infrastructure and/or directly employing people. LOL.

Just another way of redistributing income.

So is paying money to a company in exchange for a product, which the company then pays to its employees. What’s your point.

There is nothing wrong with redistribution of wealth in your example @Qingu. It is done by free will and free choice, not by force.

I was under the impression that we have free choice to elect the government in America.

Of course you raise a good point if you’re arguing that most people are not as free as the billionaires who finance much of politics to redistribute wealth as they see fit.

Spending money on products and services is still ( no thanks to Obama ) a matter of free choice. Paying taxes is not. If you can’t tell the difference, you are more deserving of pity.

The subject of buying elections is very interesting. Both parties do it, and no one seems to know what to do about it. This is just one more reason I think the Republic may be doomed. We’ll know more if Obama succeeds in buying the next Presidential election.

I don’t have a choice to spend money on food. I have to to survive.

I can choose what food to buy and where to buy it (unless I live in a local monopoly.)

LIkewise, I don’t have a choice to pay taxes. But I can choose which representatives to vote for, and support where my tax dollars go towards.

They are different kinds of choices, it’s true. But what I’m hearing from you guys is that you don’t think taxes are moral in any sense. In which case, you’re anarchists?

Hearing from who guys, @Qingu? Not me, guy.

Do you believe a democratically elected government should raise taxes from its citizens? Or is that morally unacceptable to you?

As a society, we have to collectively support certain things. Infrastructure, a strong military, law enforcement, certain social programs, edcuation; to name a few.

@Qingu

From the study I linked earlier:

“According to a 2011 Global Insight study, venture-backed companies—across all industries—accounted for 12 million jobs and $3.1 trillion in revenue in the United States in 2010.”

“The report, titled “Vital Signs: The Threat to Investment in U.S. Medical Innovation and the Imperative of FDA Reform,” indicates that America’s medical innovation economy is in grave danger of losing its primary source of funding.”

I’m just spitballing here but it seems that 12 million jobs is a significant link to unemployment. And of course $3.1 Trillion in revenue seems insignificant but over a few years it can add up to some real money.

@Jaxk just so I can follow along, the study that says venture backed companies created 12 million jobs, that is the study by the Venture Capital Association?

Does the study say how many of those 12 million jobs would be lost if we raise rich people’s taxes back to what they were under Clinton? Because it sure seems like you are spitballing.

@Qingu

Just because someone says something with which you disagree does not necessarily mean they are wrong.

That’s true, it doesn’t.

@Qingu

You guys always seem to forget, that during the Clinton years, capital gains rates were reduced by 8% in 1997. Not surprisingly we were able to balance the budget with a few spending cuts. Of course that is probably coincidental.

Likewise, bubonic plague doctors wore oilcloth robes and beaked masked filled with flowers to keep out the plague miasma, and I’m sure some of them didn’t die from the plague.

You don’t really seem to feel the need to support your claims with some actual economic mechanism. You seem comfortable pointing to “tax cut” and then “deficit amount,” and then acting as if correlation is the same as causation and therefore the voodoo trickle down magic must work.

I’ve said many times that tax cuts can be stimulative and thus generate enough economic activity to offset the loss in revenue. Likewise, government spending can be stimulative and generate enough economic activity to offset the added debt. The question is when these conditions occur, and why. You’ve never been interested in answering those questions, probably because you’re smart enough to realize that the answer for additional tax cuts is “not at this time.”

@Qingu

I have no idea what you expect to hear. If you expect some explanation of Voodoo masks, I don’t have one. If you want someone to explain how regulation makes things cheaper, you will have to make that case yourself.

You tried to make the case that the rich don’t spend thier money and therefore don’t contribute to the growth of the economy. I gave you a very specific example of why you are wrong, with specific numbers and jobs. What I get in response is voodoo masks and bubonic plague. Oh yea, and some vague notion that additional spending will pay for itself. Try substantiating that one.

According to the small business Administration more than 90 of the cost of regulation is borne by small business. And small businesses provide 65% of new job creation. It doesn’t take a membership in Mensa to figure out that regulation will have a major impact on those most likely to create new jobs. And the Obama administration is flooding us with new regulation.

Let me know if you’re having trouble connecting the dots.

@Jaxk, I have asked you many times, in many Fluther questions, to explain why you think that giving companies more capital, today, will mean more jobs.

You never do. You keep on repeating the same supply-side pablums and don’t appear interested in defending or even considering this central assumption.

I’ll also ask you again, because you never answer this question: if you had more cash on hand (due to less regulations or even an angel investor)—would you hire more workers? Why or why not?

@Qingu

The last time I answered that question you called me a liar. You don’t rally want an answer unless it agrees with your position. Nonetheless, I’ll answer it one more time.

Yes, if I had more cash on hand I would hire at least one more person. Right now we operate with a skeleton crew. Most of the time there is only one person on duty and we have to go down to the store to give them a break. I would not do that if I had another option. Frankly one more person would make everything easier for us. It doesn’t appear to be in the cards given the state of affairs at the present.

Just as a side note, remember the upgrade I complained about where I had to change the nozzles to comply with regulation? You know the one the you said Obama was going to eliminate? Well as it turns out the nozzles that they made me install are no longer acceptable (Fire Marshall doesn’t like them) so I have to change them again. God, I love regulations and the morons that create and approve, them.

Bureaucrats… the curse of the working class! : )

I challenge everyone on Fluther to watch this 8-part video. Do you have the guts to look behind the veil?

http://youtu.be/PnE-jKah7b8

Sorry! Used the wrong link. This is the right one.

@Jaxk, thank you for answering. I actually don’t remember you ever answering that question before.

Just to be clear: the first thing you would do, if you had extra cash, would be to hire someone? Increasing labor is your first priority?

@Qingu

I know you are hung up on this idea that more business is the only thing that would drive up employment. I would never say that increasing employment is my first priority. The truth is I need one more person. And the truth is, I could hire one but if I got hit with another regulation, I would be in trouble. Here’s the scenario:

My revenues are fairly predictable. My expenses are also fairly predictable. I may get hit with an unexpected maintenance event but generally it won’t be a backbreaker. The regulatory events however are major, tens of thousands of dollars. Gas stations are not preferable lending businesses even in the best of times so a loan is at best difficult. It requires me to keep cash on hand or have some source to get cash should the regulatory environment rear it’s ugly head yet again. If I had some reason to believe that I would have a stable regulatory environment I would be more inclined to hire than I am right now. I’m still trying to build back up some reserve for the next hit.

Keeping the doors open is my first priority. And turning a profit is how I do that. Everything else is secondary. If I don’t focus on that, not only do I risk losing everything I have but the employees I still have, will risk losing thier jobs as well. It’s not rocket science but the planning horizon extends much further than the current month or quarter.

The influence of a government on the number of jobs is only indirect. It’s companies which create most jobs. And they need well-educated people, good infrastructure, progress in science and technology and so forth. Denying the devastating effects of climate change for example is a job killer in America on a large scale. Americans have to import green technology from Europe or Asia. Keeping taxes on gas low is also a job killer in America. European and Asian cars are far more fuel efficient. America also has infrastructure problems because of all the anti-tax polemics. Again, a job killer.

@Jaxk, I’m sorry, but I don’t think you actually answered my question.

Let’s say you had a stable regulatory environment. Would labor be the first thing you would invest in? You said you would be “more inclined,” but then you said increasing employment is not your first priority. Can you just say what you would the extra money on, and in what order, if you did not have to worry about regulations?

This is important. Your basic economic argument here is that if we give businesses more money (or do less regulation, which in turns lets businesses keep more money) it will increase employment. Standard supply-side economics. But if businesses do not prioritize local labor over other forms of investment then this is an utter fallacy.

I’ve cited before that companies are sitting on record amounts of cash. They’ve started to hire a bit more recently, but certainly not in line with the cash they have. What has happened is consumer debt is going down and spending is going up… so businesses have started hiring. On a macro scale, this directly contradicts your basic argument.

And if you can’t even show that your basic argument holds in terms of your own specific business, I’m not sure why you’re still making it.

Just to be clear: I’m not denying that businesses having money is a necessary condition for hiring. Overregulation cuts into businesses having money, which can cut into hiring. But “necessary” is not the same as “sufficient.” Not to mention that there are also costs of underregulation.

@Qingu

You continue to miss the point. You bring up the large amounts of cash held by large international corporations which have no bearing on small business. You also seem to ignore the point that 90% of the cost of regulation is borne by small business. So if the majority of new jobs are created by small business, how does your record amounts of cash held by large multinational corporations, pertain?

Your arguments are based on a manufacturing model. The more you sell the more you have to produce. The more you produce, the more labor you need. My retail business does not produce anything. I could raise my revenue by 50% with the staff I currently have. Increasing the number of employees is not based primarily on how much I sell but rather on coverage. I need to cover the counter for the hours I’m open with some overlap for cleaning and stocking. That overlap is where I’m short and it won’t change much regardless of my level of sales.

I have already told you that if regulation had not drained me of my reserve capital I would have one more employee. If you choose to ignore that or think I’m lying, that’s your choice. I no longer care to argue the point.

You never directly answered the question. Assuming you have this reserve capital, hiring someone would be your first spending priority? Yes or no? If no, what would you spend it on first?

If you’ve already answered “yes” then I’m sorry for misunderstanding you. But I don’t think you’ve given a clear answer yet.

As for your figures on small businesses, I believe we’ve already discussed why you’re being misleading, but let’s save that for another question.