Thursday, July 26, 2012

Job Creators

Let me put this out on the table: a company does not create jobs because it has extra money. If you give a company more money, it will keep it unless there is a good business reason to spend it. Tax incentives are not, in general, good business reasons. There is one force that drives, more than any other, the creation of new and better jobs:

Demand.

I think that supply-side economics is fundamentally, fatally flawed, in that it ignores the basis of all economics: incentive. Sure, Company X might have 100 billion dollars in cash reserves, but why should it turn around and raise wages or expand hiring? What's in it for Company X?

Nothing, unless it needs more workers, or workers who perform more work, in order in meet the increased demand for Product X or Service X.

Well (some say), if Company X doesn't hire new workers, they will still invest in new equipment and buy more supplies and build new buildings, and that will put more people to work in other companies.

Wrong. Company X won't invest one red cent in equipment, supplies, or buildings unless there is a demand, or at least a perceived demand, for the products and services that Company X makes.

Well (some say), if the owners of Company X have all of this money, and they decide to bonus it to themselves, then they will spend money, and help the economy that way.

And this is true, up to a point. But then, the owners of Company X will then be a part of the demand side of the equation, not the supply side. Demand drives the economy. Sorry, supply-siders.

So, the owners of Company X are just following the incentives. So what do we do to create jobs?

Well, here's one bit of heresy: we don't need more jobs. No, really. What we really need is more choices, and jobs that pay better. We don't need to perpetuate the necessity of two-income families (or in some case, two-income individuals) with more poorly-paid jobs that make it even harder to make enough money to get by on.

And we get that money by making sure that more money stays in the hands of the demand side of the economy. And that, overwhelmingly, means putting it in the hands of the poor and middle class.

But we can't just hand it to them, because money, being nothing more than a storage of value, has to come from something. It has to represent real goods and real services that contribute to the economy. Companies that take a long view would be smart to raise wages and give more people full-time opportunities, because that puts more money into the economy and makes everyone's long-term profits rosier.

Unfortunately, we live in a world where most very large companies, the ones that hire the most people, can't see past this quarter's bonuses. And so they do everything as cheaply as possible, and manage in the process to shoot themselves in the foot, along with everyone else. And then they wonder why their company went out of business for lack of consumer demand.

Or maybe they don't, since they have left the carcass of the dying company to go somewhere else.

Until we have companies managed for long-term health, what can we do? We can stop giving so much of our money to the least-productive but most-profitable sectors: finance and government, both of which take more and give less than any other.

Then we can start saving that money, and spend it (in cash, not debt) on real goods and productive services. If we demand things that people have to work to create, then we create more—and better—jobs.

Tuesday, July 24, 2012

To My Sons

Sometimes your life colors outside the lines,
Thinks out of the box,
Scribbles, dances, weaves,
Ignores rules, patterns, limits, constraints, borders, boundaries,
And right and wrong answers.
Not walking but soaring, not sitting but leaping,
Splashing down the rocks where it wants to go, and wherever the landscape takes it.
Unleashed, uncaged, unfettered,
Broad strokes of color, clashing, blending, bleeding, dripping, spattering.

But sometimes
You
Have to rein your life in, grab it by the collar and make it
Color inside the lines.