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Investment Does NOT Create Jobs

unlawflcombatnt

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INVESTMENT DOES NOT CREATE JOBS

Investment does not create jobs. Companies do not hire workers because they can "afford" them. Companies hire workers when they need them, and only when they need them.

When do companies hire workers? When consumer demand for production increases, which increases the demand for workers to provide production. What difference does investment have on demand for workers? NONE. Absolutely zero. Companies never hire workers unless they are needed to fulfill the production demand created by consumers.

Increased demand for workers increases hiring, as well as the wages of those working. Increased demand for anything raises its price. In this case, the "anything" is workers and the "price" is worker wages. So increased production demand by consumers increases wages and hiring, because it increases demand for workers.

What creates consumer demand for production? Consumer spending. What provides the money to finance this spending? Consumer income. So what determines the ultimate limit of consumer spending, as well as production demand? Consumer income.

Worker wages provide consumer income. Thus wage decline reduces consumer income and demand for production. As a result, recent "real" wage declines have reduced consumer income, spending, and demand for production. The reduced production demand reduces the demand for workers to provide that production, causing even further reductions in wages and hiring. Thus wage reductions by themselves put downward pressure on wages. This becomes a vicious cycle. And it's a vicious cycle we need to break out of.
 

MiamiFlorida

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unlawflcombatnt said:
INVESTMENT DOES NOT CREATE JOBS

Investment does not create jobs. Companies do not hire workers because they can "afford" them. Companies hire workers when they need them, and only when they need them.

When do companies hire workers? When consumer demand for production increases, which increases the demand for workers to provide production. What difference does investment have on demand for workers? NONE. Absolutely zero. Companies never hire workers unless they are needed to fulfill the production demand created by consumers.

Increased demand for workers increases hiring, as well as the wages of those working. Increased demand for anything raises its price. In this case, the "anything" is workers and the "price" is worker wages. So increased production demand by consumers increases wages and hiring, because it increases demand for workers.

What creates consumer demand for production? Consumer spending. What provides the money to finance this spending? Consumer income. So what determines the ultimate limit of consumer spending, as well as production demand? Consumer income.

Worker wages provide consumer income. Thus wage decline reduces consumer income and demand for production. As a result, recent "real" wage declines have reduced consumer income, spending, and demand for production. The reduced production demand reduces the demand for workers to provide that production, causing even further reductions in wages and hiring. Thus wage reductions by themselves put downward pressure on wages. This becomes a vicious cycle. And it's a vicious cycle we need to break out of.
"A good investment climate is central to growth and poverty reduction. A vibrant private sector creates jobs, provides the goods and services needed to improve living standards, and contributes taxes necessary for public investment in health, education, and other services. But too often governments stunt the size of those contributions by creating unjustified risks, costs, and barriers to competition."

— François Bourguignon, Senior Vice President and Chief Economist, The World Bank
 

LaMidRighter

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unlawflcombatnt said:
Investment does not create jobs. Companies do not hire workers because they can "afford" them. Companies hire workers when they need them, and only when they need them.

When do companies hire workers? When consumer demand for production increases, which increases the demand for workers to provide production. What difference does investment have on demand for workers? NONE. Absolutely zero. Companies never hire workers unless they are needed to fulfill the production demand created by consumers.
The part you leave out however is that hiring employees, retooling, R&D, distribution, marketing, and public relations all cost money, this is the point in which investment capitol comes in, investing provides the start up capitol to introduce a new product or improve an existing one, thus increasing demand, if the profit is high enough then more workers can be hired and in case the product has a slow start the investment money is a buffer to the losses incurred.

Increased demand for workers increases hiring, as well as the wages of those working. Increased demand for anything raises its price. In this case, the "anything" is workers and the "price" is worker wages. So increased production demand by consumers increases wages and hiring, because it increases demand for workers.
I believe this one mostly falls under my first response as well, but I will add that the value of the worker himself contributes to said demand, a worker who is dependable and affordable will naturally be in high demand when needed and when budgets allow.

What creates consumer demand for production? Consumer spending. What provides the money to finance this spending? Consumer income. So what determines the ultimate limit of consumer spending, as well as production demand? Consumer income.

What creates consumer demand for production? Consumer spending. What provides the money to finance this spending? Consumer income. So what determines the ultimate limit of consumer spending, as well as production demand? Consumer income.

Worker wages provide consumer income. Thus wage decline reduces consumer income and demand for production. As a result, recent "real" wage declines have reduced consumer income, spending, and demand for production.
"real wages" are subject to the principle of inflation, natural inflation will happen as time progresses, however, an unnatural inflation in price is currently the norm because of the costs associated with production/human resource/and distribution regulation, making what used to be a pretty generous salary of 5.15 and hour basically useless for employees with responsibilities, to combat this, some want to raise taxes and minimum wage, the latter will increase inflation and the former will take investment dollars out of the market, thus reducing the buffer of investment and demanding that prices increase with costs, it always comes back to the consumer and is a further cause of inflation.
The reduced production demand reduces the demand for workers to provide that production, causing even further reductions in wages and hiring. Thus wage reductions by themselves put downward pressure on wages. This becomes a vicious cycle. And it's a vicious cycle we need to break out of.
The economy is like a circuit, if any one part of the chain is weakened then the whole thing becomes compromised, which further extends weakening along the chain, unfortunately, the people hit hardest are the one's that should benefit from government programs and wage increases, the government essentially prices them out of the market with the rule of law.
 

oneofthem

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dude...
that's gotta be the worst economics i've seen in, oh, years.

first you say companies hire because of need, DUH!
investment is teh way the "need" is manifested, as in the desire to increase production capacity or just plain increase revenue.
 

danarhea

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oneofthem said:
dude...
that's gotta be the worst economics i've seen in, oh, years.

first you say companies hire because of need, DUH!
investment is teh way the "need" is manifested, as in the desire to increase production capacity or just plain increase revenue.
I have to agree with you on this one. However, the climate has to be right to invest. In a bad climate, the investors dont invest, but tend to hang onto their money.

Often to create a proper climate for investment, a need has to be created, sometimes out of thin air. If the need can be sold to the public, then the public starts buying, and production increases. A lot of it is pure psychology and selling.

Sometimes, one product can create a need for another, but a hard sell has to be done. For instance, the selling point on computers was to create a need for the buying public to save time, organize information, communicate in a new way, and of course, play games. The need for the internet was generated in much the same way, and prodded with the lowering of computer prices through new processes that made them cheaper. When enough people could afford computers, the internet blossomed, and the advertisers were pushing all the right psychological buttons the whole time in order to steer the buying public in the general direction they wanted to lead them. And who can argue that the computer revolution did not heat up our economy in a big way? Nobody.

Advertising, marketing, and psychology pushed the computer age more than the technology itself did. The result? We are talking to each other on this forum. :)

Manipulation can be bad if misused, and it has been on many occasions, but sometimes it can lead to a good thing, such as our little discussion here.
 
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Good post galenrox.

Lets say that an established company is borrowing money, or is requiring investment in its company so that it can update its factory or office with the latest machinery, that will ultimately increase productivity, and reduce the actual cost of that company producing their product.

Now that kind of investment will most likely, not increase the amount of jobs up for offer at that company, but the investement in new equipment may actually cause the other firm to have increased sales, and therefore the equipment/machinary company may need to hire more workers to meet increased demand.

But as galenrox pointed out, if companies are expanding into new areas that they are not already established in, then obviously they are going to hire people so that the company can produce that new product. And therefore return the investment.

Capitalism is a dynamic thing, because people's needs are dynamic, and therefore demand for any product is going to reflect that variable nature in people's needs.

For all those that don't believe that investment works, just check out Japan. They are one of the richest nations in the world, because during the Korean War, huge amounts of money were pumped into the Japanese economy, so that Japan could produce the industrial/electrical components needed by the Allies to fight the N. Koreans.

Oh and a favourable U.S and international monertary policy, to generate a prosperous Japan, to counter Sino-Soviet domination in the region, helps too!
 
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