A disappointing jobs report this week is revealing just how weak this economic recovery is and how long it’s going to take before the unemployment rate starts descending. As reported by Lila Shapiro at Salon:
Only 54,000 jobs were added in May — well below Wall Street’s expectations and the smallest number of jobs added in the past eight months — and the unemployment rate rose to 9.1 percent, according to the Bureau of Labor Statistics’ latest snapshot. For the labor market to simply keep up with population growth, experts say a bare minimum of 125,000 jobs must be added each month. In the two years since the Great Recession officially ended, economists say, there has been little labor market recovery.
Republicans, however, are doubling down on their strategy to make things even worse by insisting on massive spending cuts. Nothing will stand in their way, not the beleaguered mid-west desperately in need of assistance after floods and tornadoes, not the full faith and credit of the United States. Disaster relief and the debt ceiling are both being held hostage to their fiscal irresponsibility. Their solution to either cut taxes or outlaw abortion. (I’ll save the second one for another time). Once again, we hear the same complete nonsense from Republicans that we’ve been hearing for generations. Speaker of the House, and master of the non-sequitur, John Boehner said, “One look at the jobs report should be enough to show the White House, it’s time to get serious about cutting spending.”
Tan Man also said, “We can’t raise taxes on the very people who create jobs,” repeating a Republican talking point that I’ve been hearing since the reign of Reagan, but it’s older than that. Republicans have been repeating this nonsense since The Great Depression and before. It’s their conventional wisdom, but it has no basis in reality and shows that Republicans, the supposed friends of business, know absolutely nothing about running a business and should be ignored. Or even told, “Sit down and shut up.”
The engine of our economy, the engine of any economy, is consumption. Nothing gets designed, nothing gets built, nothing gets sold unless there are consumers with money to spend. That’s a fundamental law of nature. It does not matter what economic system you have – socialism, communism, capitalism – all economic activity is consumer driven. Jobs are not created because the owner of a business gets a tax cut and therefore has extra money to spend. Any business owner or corporate manager who does that is completely incompetent.
In all my years as a manager, I have never had a boss come to me and say, “Hey Fred, I just got a tax cut. Why don’t you help me spend it and hire a bunch of people we don’t need?” There is one thing alone that drives hiring–increased demand, or anticipated increased demand, for whatever it is your company sells. Period.
Given that the economy is consumption driven, the only thing that will cause companies to start hiring again is people buying stuff. In order for people to buy stuff, they have to have jobs. Cutting spending, throwing thousands of federal, state, and municipal workers out of work will only make the problem worse. Spending needs to actually be increased, paid for by tax increases to the wealthiest, who have been doing just fine, thank you.
So Mr. Speaker, your cocktail-addled brain has it exactly backward. We don’t have a spending problem. We do, however, have a revenue problem.
For another take on this subject, see “Whatever Happened to Jobs! Jobs! Jobs!” at Critical Pages.
More from the inventor of “Conventional Wisdom:
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