Motoko Rich wrote a piece in The New York Times about President Obama’s new jobs plan and what some employers say about hiring more employees.
Rich wrote: “The plan failed to generate any optimism on Wall Street as the Standard & Poor’s 500-stock index and the Dow Jones industrial average each fell about 2.7 percent.” This is a patently absurd statement. The stock market fell because of concerns over European debt, primarily that of Greece, and over the exposure of European and American backs if Greece went belly up. It had nothing to do with Obama’s American Jobs Act.
Then Rich talks about “… perceived obstacles to business expansion like government regulation ..”. This is pretty much a talking point propagated by Conservatives. It’s true that America’s biggest polluters, the multinational energy companies, and America’s biggest rip-off merchants, the banks, may be queasy about new regulations, but, by and large, small businesses don’t have too much to worry about in this area.
Overall, however, Rich’s article highlighted one thing that that I, and many others like me, have been beating the drums about – namely, that demand creates jobs; that businesses wont hire if there’s no demand for their goods.
Over the past thirty years, we have learned the powerful lesson that supply-side, or trickle-down, economics is truly “voodoo economics” and that George H W Bush got it right. Today, multinationals are sitting on trillions of dollars of cash, but wont invest it in job creation, because there is no demand for their goods. Likewise, small businesses, America’s greatest job creation engine, are facing the same problem – lack of demand.
The only way to create demand in a slow economy is to get spending money into the hands of those who actually spend it – the middle class and the poor. The only entity that can do that is the Federal Government. Obama’s program will work, if the GOP and Tea Party hostage-takers don’t deliberately screw it up.
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