|
If $250,000 is spent on a highway project, how many jobs does that create? Some of that money is going to supplies, like concrete, asphalt, and rebar. Some of it is going to gasoline to run the machines. Some of it is just providing work/income to people who already have jobs as opposed to creating new jobs. But all of that money more or less directly goes to people, providing them with income, even the money spent on concrete provides income to the concrete plant and their workers.
One example I recently saw on the news is that the Post Office is $9 billion in the red. In order to close that gap, they are talking about getting rid of 120,000 workers. That averages out to just $75,000 per job - which is still a heck of a lot of money per job, but I think the job cuts only close part of the gap. But there is one way the Government could save 120,000 jobs for just $9 billion. But then what happens next year?
The other way the Government supposedly creates jobs is by giving tax cuts. If the government gives $250,000 in tax cuts, then the rich people who get those tax cuts have three choices - they can spend, save, or invest. Real investment, as economists define it, would just be a different type of spending. Investment as the public thinks of it, involves buying stocks and bonds. To an economist that is just an empty transfer, not real investment. Real investment would happen when a business buys machinery or a building or some other structure (I am thinking of the water department putting in a new pipeline or a road or a levy, all of those would be considered investments.)
Either way that money goes back into the economy. Money invested provides income to those who sell the stock (some of whom do not live in the US) and then those people can save, spend, or invest. Money saved eventually gets lent out, except for a fraction that is required to be kept in reserves. Then the borrowed money is spent or invested which provides income for a seller.
Eventually money spent is supposed to create or save a job. Money for retailers allows them to hire, or keep their people employed, and more sales mean more work for manufacturers.
To me, it seems like a very convoluted way to create jobs, especially if it takes $250,000 in tax cuts to create a job. Because with that $250,000 you could just hire 7 people at $30,000 a year (with FICA taxes that would cost $226,065) and when they spent their paychecks that would stimulate the economy just as much as the tax cuts would.
Of course, there would be problems with that. First, what are those seven people going to do? It's probably not a good idea to pay them to do nothing. Second, the people who currently work for less than $15 an hour are going to want one of those $30,000 a year jobs. Say you start the program in January and by April it has created an $8 job. Are people gonna quit their $30,000 job to take an $8 an hour job, even if it is more permanent? I'm probably not going to. I will stay with the $30,000 job for as long as I can. Maybe in December I will take an $8 job, maybe even in November, but not much earlier than that. $576 a week is just too much more than $320 a week.
A lot of taxpayers might get mad if they make less than $30,000 to think of their tax money going to pay people more money than they get if those people are not working real jobs. For some reason people get less upset about those making $80,000 or $90,000 a year getting big tax cuts. Because they get their own $600 and that acts as a pacifier, distracting them from the $2,400 that richer people are getting.
So in that sense, it is the greed and jealousy of the average voter that makes them want to pay more to create fewer jobs than to use a more direct approach. They think, as long as I get $600, then I don't really care if it creates jobs or not.
This concludes chapter 1 of war and peace, thank you for reading to the end.
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
