Monday, November 22, 2010

Investment doesn't create jobs

Republicans, conservatives, the national media, and every business sycophant in the world is telling us we need to abate taxes on investment to create jobs. They're either idiots or they're bullshitting us.

Investment doesn't create jobs. (Wha?!?! Socialist!)

Imagine you have a pile of money, credit, assets, couple of $100,000 cars. You're a member of the oligarchy, bless your vast unshared wallet. Schweet, huh?

Millions of people around you are unemployed. Well, they aren't exactly around you. You have gated communities to prevent that. Not just one gated community - it would be so unutterably boring to live in only one palatial mansion.

But you've read in the business press that one in ten people are unemployed (good news! no wage inflation! the stock market should go up!), and maybe you've even read a bit deeper into the report and learned that U6 shows more than one worker in six is not working and wants to, or not working full-time and wants to, or would want to work if there were any jobs available.

You as an oligarch believe that your taxes should be as close to zero as your lobbyists can get them. A fat subsidy, even, would be your due as a Galtian superman of industry. You sure as hell are not willing to extend unemployment benefits to the slackers, spongers, and freeloaders who haven't been able to find work (or rich parents, the way you did).

Instead, you're looking for an opportunity to put your assets into production, some investment that will produce goods or services that people will snap up like hotcakes at premium prices.

Now start some really difficult imagining: You start a factory to produce widgets that no one can afford. Because you want to give people good jobs to build things. Because you're the most generous guy in the world, who just wants to see the free market solve every resource allocation problem. And what's your personal interest if it's not the "free" market?

Huh!? You'd spend your money to create make-work jobs, but you wouldn't spend your money through taxation to extend benefits? How does that make sense?

Wait, who said anything about make-work jobs? Aren't those all in the public sector? Well, mostly, yes. The private sector doesn't do make-work jobs (except for a very few no doubt deserving scions of oligarchs). Which is the reason you don't build a make-work factory just because you can and it would be accounted as investment.

This is the problem with the theory of investment trickling down into jobs: There's no market filled with eager customers. No one - besides you and your fellow oligarchs - has any money to buy your hypothetical goods and services. Why the hell would you build a factory to make something that no one can buy? Until there's demand, there's no need for investment, and there's no reason for it.

Your answer is: Hell, no, I'm not parting with my money just to lose it.

So, like your bankers, you sit on your capital eating bon-bons, telling the help - who can't afford to argue and so nod their apparent approval - that all those lazy moochers who aren't your servants should just get off their asses and take a few risks the way you did (when you applied to Yale listing all the relatives who made you a double ne plus ultra legacy).

Demand for goods and services creates jobs. In a recession as deep as this one, where idle excess capacity is rife, investment follows demand to create businesses that then have to staff up. Until there's demand, though, you as an oligarch can ride out the economic stagnation. Only the public sector can fill the demand gap, and because of Republican and conservative Democratic opposition, it hasn't and now it can't.

So everyone but you and yours is left to suffer. And you don't give a shit.

You lucky oligarch bastard.

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