OK, rant time again:
Topic: The feds current "economic stimulus" package, and it's promise of job creation
Correct me if I'm wrong, but I see most of the USA economy as based upon the consumer. Most of the "private" sector jobs are driven by various purchases, ultimately linked back to the consumer. Sure, health care (hospitals, nurses, etc) and public service (government, police, fire, etc) are not directly tied to a consumers "choice", but most everything else in our economy does fall into that category.
For example, the company that manufactures guitar strings is only as productive as long as there is a consumer purchasing the strings. Then, looking "up stream", the guitar string company only buys the material for the strings, as long as they are selling strings. No sales to the consumer, means no purchases of material for making strings. No consumer purchases, and companies up stream start having to reduce employees due to the reduction in sales. Granted, this isn't the best example, but the idea applies to most industries. If the consumer isn't buying, this impacts all manufacturing industry.
The feds are telling us that they want to throw money at the businesses, in order to create jobs. I'd argue that they are attacking the wrong side of the problem. Creating jobs at a company simply based upon a "cash advance" from the government, doesn't create any additional customers. It simply puts an artificial increase in place, which would promptly deflate once the money is gone. You don't create jobs first, without any customer demand driving the need. And, as far as I can see, many people are having trouble simply keeping their primary needs met (housing, food, heat, etc).
If the feds are going to insist upon throwing our money at the current "economic crisis", I'd propose they first throw money back to us. We are the end consumers, and our purchases will determine where job growth will happen. Sure, it's still a temporary fix, but this approach has a much more direct link to real jobs.
Now some may argue that the feds are trying to make use of the "trickle down economics" concept, by first giving money to the businesses. Their hope is that businesses will then use the money to hire more employees, which will then result in more money in the employees pockets for consumer purchases. The original "trickle down economics" concept was based upon reducing taxes on the business owners, to encourage them to grow their business and reward/hire employees. The idea still was based upon growing the business, which meant finding more customers. Money wasn't directly given to business owners, but their tax burden was reduced. The business owner was encouraged to personally invest more in their business, and thereby create more growth in the business (sales and jobs). That's a different approach, compared to the current fed plan where government is investing.
The other issue is that many businesses are not in a position to simply expand their workforce because they get a government handout. What point is there to increasing production on a line of products that nobody is buying? Granted, the law of "supply and demand" would dictate that this surplus of product would ultimately reduce prices for the consumer, but is that the direction we want to go? If that is the goal, why not just reduce taxes?
My suggestion looks from the direction of businesses driven by consumer purchases. Find ways to get people to start spending money, and that will have a net result of increasing jobs far beyond just giving money to businesses.
Ultimately, these are all temporary solutions, and that's what scares me the most. None of these solutions seem to deal with the true issues at hand. We have a bloated economy and government, which has been running on fictional accounting. Many were not ever expecting a slow down or reduction, and simply always expected increases and growth. However, at some point (which I believe we have reached), you get to a point where the economy can no longer support the expectation of continued growth.
I believe many of these companies need to either go out of business, or reorganize themselves to operate much leaner. With no change in the way things currently operate, a "economic stimulus" will only be a short term patch on the problem (at best).
Much of the world is in a far worse position, and do not have the benefit of a free market capitalist economy. If our leaders would take appropriate action to help reduce the burden on the consumers, we would see our economy bounce back.
The feds only have money they take from us via taxes. If we continue looking to them for help in our economic problems, we are doomed to fail. The citizens have the tools to handle the economy, and the government needs to stop adding more burden to those buying with earned money.
Give the consumer more control of their own money, and the market will determine which businesses survive or fail. Government cannot solve this with tax dollars.
But, we have few too many people who still see the government as a "money machine", and want to look to them for rescue. We need to work harder to educate these folks on where the government really gets their money (from our own pockets).
Oh, and did you notice that the magazine Newsweek has now declared the USA a "socialist" economy. We better hope this isn't actually fact yet, and get that boat turned around ASAP. Newsweek claims we are getting more like France. I'm not sure I see how that's a good thing.
The "baby boomer" generation is starting to reach retirement age, and that's going to increase social security needs, while reducing the existing job force. That means either reducing social security benefits, or increasing taxes on those still working. Although the natural reduction in workforce will help those companies who need to trim workers, it will also create a problem for how the government plans on continuing to fund their social programs. This is a "storm cloud" on the horizon, that I have yet to hear anyone seriously talk about. Watch for it.
Have a nice day!!
Rant mode off.
