The great consumer bust: The real reason for high unemployment

THE notion that the United States needs to begin moving away from its consumer economy — toward more of an investment and production economy, with rising exports, expanding factories and more good-paying service jobs — has become so commonplace that it’s practically a cliché. It’s also true. And the consumer bust shows why. The old consumer economy is gone, and it’s not coming back.

I wonder what the alternative is. Would it be hole digging for one group of new employees, hole filling for another group of employees, another group of employees dedicated to ensuring the holes are dug to the proper size and then refilled to the proper firmness? What should an economy be dedicated to? Towards the ends of forced full employment instead of the tried and true voluntary production of goods and services of value for voluntary payment ofgoods and services in return? Are there really people in the world who can read this and think this man is smart?

Sure, house and car sales will eventually surpass their old highs, as the economy slowly recovers and the population continues expanding. But consumer spending will not soon return to the growth rates of the 1980s and ’90s. They depended on income people didn’t have…

That may be true. But there are goods and services needs not being met today that could be met by those who are unemployed. The only thing standing in the way is federal regulations from the popular minimum wage to things like the 100W incandescent light bulb ban, to the more local licensing of many jobs. The regulations prevent people from working for themselves, and force them to work for established companies with the crony capitalistic protections incumbent upon our current over governed society.

The biggest flaw with the past stimulus was that it imagined that the old consumer economy might return. Households received large tax rebates, usually with little incentive to spend the money (the cash-for-clunkers program being the exception that proves the rule). People did spend some of these across-the-board rebates, and kept economic growth and unemployment from being even worse, but also saved a sizable portion.

Cash for clunkers was a failure. The marginal cost per additional vehicle sold was around $45,000 and primarily moved future sales to a sooner date rather than factually increase actual demand. $45,000 is significantly more money than the average value of the additional cars sold. This is your poster child for success and good? As for people saving some of the stimulus they were given, were you not just lamenting about the 1980s and 1990s where people spent money they did not have? Which is it buddy? People are too frugal or people are too profligate, I guess what you are looking for is the Goldilocks of government coercion to get people into just the right degree of spendtrift? I got an idea, how about getting rid of the regulations that hamstring the populace from creating wealth and let each do with their personally created wealth what they want?

A more promising approach could instead offer a tax cut to businesses — but only to those expanding their payrolls and, in the process, helping to solve the jobs crisis. Along similar lines, a budget deal could increase funding for medical research and clean energy by even more than President Obama has suggested.

Oh, I see, tax cuts do matter to increase employment. Lets look at what you must be talking about here though, in relation to the outstandingly exception that proves the rule. The government wants to entice businesses to hire more people, but the businesses know they have enough people and do not want more people. How much money needs to be offered to get a business who does not need an employee to hire an employee? Well, since the company is in business to make a profit and be better off tomorrow than they are today, I would garner the government would have to give them more money than the company pays the employee in salary and benefit as well as the business cost of training, putting into an office or other asset. It is calculated that the stimulus, even under the most rosey of scenarios that we just had cost over $222,000 per saved or created job. I would imagine that is about how much money the government would have to spend to get a business to hire a new employee, about 8 to 15 times the actual salary the employee would be paid per year. Those employees would stay employed until the company is no longer getting the money from the government, much like the recent stimulus saved or created jobs.

astonerii on July 17, 2011 at 3:14 PM