I saw this cartoon over the weekend, and it cracks me up how the left sees job creation. According to this, it is the workers who create jobs. The left panel depicts CEOs of large corporations as job destroyers, while the middle panel depicts smaller business owners as people who create jobs only when the middle class, the workers, have enough money to create demand.
It’s true that many large corporations have moved the bulk of their operations overseas. Labor costs are always a concern for any company, as are taxes. The left likes to rage about how these evil corporations are keeping income overseas so they don’t have to pay taxes on it. Is that a failure of the corporations, or of government policy and law? The fact is, government policy has been encouraging corporations to move out of this country. Mexico and Canada have benefited far more than America has from NAFTA.
Don’t get me wrong. I’m sure businesses lobbied for all of this, after all, the job of a CEO is to look after the best interests of the business, to do what is best for business. If labor costs and taxes are cheaper overseas, then it should not surprise anyone when business looks overseas to solve its problems.
Let’s focus on the third panel. Business owners hire workers when “middle class consumers have enough money to spend which creates demand”. While true to a degree, it is also misleading. Where, exactly, does the middle class consumer get enough money? They have to have a job (most of us anyway) that pays them enough to be able to have enough money to create “demand”. In other words, someone had to create a job for this middle class wage earner to have in order to have enough money to spend on their demand.
If the product is really good, it will create demand for it, like the iPhone for instance. As demand goes up, more jobs will be created. Even by the evil corporations.
To suggest that the middle class consumer is the only source of demand is disingenuous. Companies demand products from other companies.
For example, my wife and I have what I call a micro business. We create a product that we sell at the local farmers markets. We were discovered by another company, and we now supply them with our product, which they in turn use on their product, and sell it to other businesses for them to sell in turn. The ingredients that we use we get from yet another company.We create demand, albeit small, from Company A, and in turn, we take what we created and sell to Company B, as well as our customers at the markets.
We have no employees, other than ourselves.
Which is the other misconception that the above cartoon shows.
People do not start businesses with the intention of creating new jobs. That’s a side effect of having a great product to sell.
That’s what creates the demand. Great products. Those companies that do not create great products don’t survive for long. Those companies that do create great products grow, and eventually they turn into corporations. *shudder*. As they grow, they hire people to work for them to produce this product. Every major corporation out there started as a small business at some point. Every business has a cycle, and sometimes they go through growth spurts where they hire lots of people, and sometimes they go through a period of time where business contracts, and they let people go.
There is nothing evil about it. Companies are formed because of someone’s desire to make more money. Corporations have shareholders who put money into buying shares of the company in order to make more money, be it from dividends, or the value of their shares increasing. It’s all about the desire to make more money, the desire to maybe get rich, if their product is good enough. It’s about the desire to retire young and be able to spend their time in a more leisurely way.
One final note.
Far be it for me to use my blog to shamelessly promote my business. For those who are interested or curious as to what my wife and i do on the side, visit www.twoshakesandashimmy.com
It’s not a chicken and egg thing.
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