Forum Post: Spending money creates jobs. ( Econ 101 )
Posted 12 years ago on Jan. 25, 2012, 10:08 p.m. EST by BackRider
(83)
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The poor spend nearly100% of what they earn.
While the rich only spend a small portion of their earnings.
Who creates the most jobs?
More simplistic "logic." When one group controls most of the wealth, it controls the economy and determines how those they control must behave barring revolution.
Occupy,
BackRider summed up, rather elegantly, I think, the foundation of Keyensian economics. It is a good and accurate response to the right wing insisting that the wealthy should not be taxed because they are the job creators.
That is in no way in conflict with the understanding that wealth equals power.
Demand grows the economy and leads to job creation. Vast wealth controls how that economy is distributed and who benefits.
I therefore don't understand why you respond to the OP with hostility. It seems to me that you are both on the same side.
Hostility? No, laughter, he or she makes the point for Occupy.
Perhaps I misunderstood. You wrote "more simplistic logic". You must have meant "Here is some additional SIMPLE logic." (Simplistic is derogatory, and not usually applied to a point one is making in support.)
Anyway, sorry for the misunderstanding.
I like your logic
Thanks everyone for your thoughts.
Though indirectly, compared to the rich, poor contribute a higher percentage of their income towards creating demand and job creation.
There is only one reason a company increases employment. And that is an increase of demand (meaning the desire and ability to buy goods) or an expected increase in demand. American companies are now sitting an all time record cash level of $2 trillion dollars. Are they hiring? Of course not. What company takes on new workers to stand around? These last few decades we have been on this 'supply side" kick thinking if we give more and more tax breaks and subsidies to companies they will hire. There is actually a glut of investment capital now. Besides the cash companies have on hand interest rates are at an all time low. This whole situation is not new, we were in the same place in the 1930's. And to suggest companies will invest in R and D - no, they won't if demand is down. Historically the private sector does not do basic R and D. Studies repeatedly show that about 80 % of basic R and D are done by the public sector. Some examples are the computer - which was made by the private sector only after decades after prototypes were done at universities. Other examples' the internet and GPS. T
Also, today's rich are so rich that additional income does not translate to increased demand because they have all they need or want.
The rich, obviously. Private sector investments fuel job growth. I have never been hired by a poor person.
You hire a contractor to build your house. The contractor hires employees. Who created the work ? You or the contractor.
The person whom spends the money creates the work.
Poor people spend 100% of their earnings ( nearly) creating the most jobs possible. In fact it was the poor whom took out the loans that created the boom.
If you are using the analogy of the contractor vs the customer who is creating the jobs, yes you are correct. Without the paying customer, us contractors don't have work. However, it's is not the poor who are/were building, remodeling or renovating thier homes. The loans made ,were not to those without the means to pay those loans back, but rather the ones who could. Home equity loans were not given as freely as the sub prime mortgages. Different animal entirely.
The rich don't need loans.
Well then define rich and poor for me. Cause my clients are not 1%ers and they are not poor. Upper middle class is more like it.
Spending money creates demand; creates jobs. The poor spend nearly every penny they earn. If the rich would spend every penny they earned than the economy would not be in recession.
Define rich and poor? Was that a serious question !
Of course it is a serious question. There is not just 2 levels of income in this country. It is not just the uber wealthy and the poor. Of course plenty are struggling, but there is also a good number who are comfortable and they are spending. Not as casually as they may have 5 or 6 yrs ago, but they are. They are weighing out what is more important.. a new car or a new roof. If the poor spend everything like you claim, then they are not prioritizing thier spending.
Why in the world would the wealthy spend everything they have? Makes no sense.
who bought the products that the rich got rich off of? and dont say they are shopping at walmart, best buy, target, or the dollar store or buying cars that cost under 40k. thats where the poor people spend
the rich hire people in China. Small business, a part of the 99% hires Americans
I see your point.
A person who has nothing can buy nothing. So, what gives that person the opportunity to "acquire" or "sell" something "labor" and "knowledge"