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The clock anvil and the lie that business creates jobs

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The clock anvil and the lie that business creates jobs

Ever since David Stockman sold the ruse to Ronald Reagan, the American fish has been swallowing the lie that businesses create jobs hook, line, sinker and worm. And in the process of digesting what we've swallowed we have also swallowed the accompanying lie that cutting business taxes to the point of eliminating them altogether is the way to keep the economy spinning, and if its revolutions slow, to get it swirling once again.

It's time to shove an entire bottle of Ipecac syrup down our collective throats.

Understand this basic truth: No successful business has ever created even one job.

Demand for the product or service the business produces creates jobs. Two examples.

Let's say you awake one morning in a "Eureka" fit of blinding brilliance: The way to become a billionaire -- invent the clock anvil.

So what is an anvil anyway? It's a heavy hunk of iron with a flat surface on top and a curved cone at one end, and it's used for shaping red hot steel or iron to whatever the desired shape may be. The craftsman accomplishes that task by laying the stock metal on top of the anvil and literally pounding hell out of it with a hammer.

Good enough, you say, but why would anybody want a "clock-anvil"? Perhaps one response would be, so the worker would always know what time it was. In truth, however, it's manifestly clear to all but the simplest of simpletons that no one would ever buy a clock anvil. And if no one was going to buy such a product, no business person is going to try to manufacture it, regardless how low, or even nonexistent the tax rates were. The pièce de resistance coup de grà ce here is that, in the absence of a manufacturer of clock-anvils, not a single worker is going to be hired to work in a plant that doesn't exist, making something no one wants.

On the other hand, let's say that back in the 50s you awoke one morning to a similar jolting fit of blinding brilliance: The way to become a multi-billionaire was to open a chain of strip-down hamburger joints that would sell hamburgers for 10-cents, cheeseburgers for 15-cents, french fries for 12-cents, soda fountain dispensed soft drinks and milk shakes (vanilla or chocolate; the only choices on the Spartan menu) for equivalently low prices, and that every order would be taken at an outdoor window, where patrons would queue. No inside seating. No waitresses. Just a bare bones menu that featured low prices, genuine quality, cleanliness, and faster service than Americans had ever seen -- or even imagined -- before.
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Of course: The Ray Kroc and his McDonald's phenomenon. Although his "Eureka" flash was born in California, the first McDonald's I visited was in 1960, on Grand River Ave, right on the outskirts of Michigan State University in East Lansing. Two years later a McDonald's opened on Dix Highway, one block south of Southfield Rd. in Lincoln Park, Michigan; less than a mile from my home. I recall the scrawl that ran just below the "McDonald's": "10,000 hamburgers served." Then it was 50,000. Before long the sum ran to 100,00 and 500,000. Today it's "Billions and billions served."

Through the years millions and millions of young Americans worked in the chain. But not Ray Kroc, nor any of either the corporate or franchise restaurants created so much as one job. Demand for what the restaurant was producing did that. And every one of Kroc's first millions of dollars income and every job grew during the period when the top personal tax rate was around 90%!

Same thing for Henry Ford. And Horace Dodge. And Ransom Olds. And Howard Hughes. Jobs, jobs, jobs, and millions and millions and millions of dollars of personal wealth.

All that Republican slashing of tax rates have accomplished has been the further lining of the already nicely lined pockets of millionaires and multi-billionaires. And not even one additional American job has been the consequence. Which is not at all true: What has been the byproduct has been an Old Faithful predictable gush of corporate lobbyist positions, Wall Street tycoons, and CPAs, all to insure the high-flying private corporate jets remain aloft.

Regurgitate the lie. Whether large or small, businesses simply DO NOT create jobs! Demand alone is responsible. But before we can experience demand sufficient for the creation of jobs, first must come consumers with the wherewithal to purchase whatever product or service business produces.
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It does not matter from whence the consumer derives the dollars necessary to buy a product or service; a wage or salary or dividend or unemployment check. All that matters is that the consumer has the money. The buyer purchases an item of inventory from a retailer's shelf and that item must then be replaced by the retailer who orders the replacement from either the manufacturer or some wholesale middleman. But before too many steps, the manufacturer is called upon to manufacture more of those items. To do that, he or she, needs workers. And folks, this is how we get jobs. PERIOD!

 

An "Old Army Vet" and liberal, qua liberal, with a passion for open inquiry in a neverending quest for truth unpoisoned by religious superstitions. Per Voltaire: "He who can lead you to believe an absurdity can lead you to commit an atrocity."

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Hopefully OEN's Paul Craig Roberts will weigh in; ... by BaronVonRothschild on Friday, Dec 4, 2009 at 9:42:52 AM
Sorry, it's business that create jobs, given that ... by TL Winslow on Friday, Dec 4, 2009 at 9:43:55 AM
The author of this article personally is clueless.... by IrishVoiceofReason on Friday, Dec 4, 2009 at 10:35:55 AM
Hey Irish!Read my rejoinder to Winslow, then do yo... by Ed Tubbs on Friday, Dec 4, 2009 at 10:47:08 AM
It's interesting: the assumptions some folks make.... by Ed Tubbs on Friday, Dec 4, 2009 at 10:42:34 AM
Mr. Tubbs is correct that consumers of products ar... by Phillip Michaels on Friday, Dec 4, 2009 at 10:00:16 AM
Reduced to a simple syllogism, the author states; ... by Kevin Burnett on Friday, Dec 4, 2009 at 10:19:09 AM
Evidently it's quite a few. Stanford University is... by Ed Tubbs on Friday, Dec 4, 2009 at 11:21:42 AM
This is the only response I'll give to you on this... by Kevin Burnett on Friday, Dec 4, 2009 at 12:56:15 PM
It is frustrating, not to mention tragic, how Econ... by Ed Tubbs on Friday, Dec 4, 2009 at 7:00:43 PM
I will go against all the republican venture capit... by liberalsrock on Friday, Dec 4, 2009 at 10:56:05 AM
There are lots of MBA types chiming in who are so ... by Bryan Emmel on Saturday, Dec 5, 2009 at 4:03:22 AM
This article is beautifully clear and explicit as ... by David Chester on Sunday, Dec 6, 2009 at 1:48:56 AM
"Winslow and his cronies manifest their sad ignora... by TL Winslow on Wednesday, Dec 16, 2009 at 11:28:42 PM

 

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