26 October 2014

Creation

Oh, Hillary, you silly creature.

Let's cover this again.

Jobs are a side effect of business.  Business is a side effect of commerce.

Commerce causes businesses to be created.

Businesses hire people.

So, yes, businesses create jobs.  But only successful and profitable businesses.  Businesses that have grown past the point where a sole proprietor can do everything that needs done.

A basic example is a hot-dog stand.  At some point there will be too much business to both run the register and cook the food or accept that some customers will not be served.  If the owner decides to run the register and hires someone to cook, that's a created job!

The government can't really create such jobs.  The best they can do is to keep out of the way so that our business owner can afford to hire someone when they get so busy that they need someone to cook while they take orders.

The government can easily destroy jobs by adding taxes, fees, regulations and compliances that eat time and money that would otherwise go towards paying employees and keeping the business profitable.  Government can even destroy jobs thru such additions to the things a business needs.

In the hot-dog stand example, a government mandate to use a given amount of alcohol made from corn as a vehicle fuel will cause the price of the meat used in the hot dogs to rise from increased feed costs, and that will, in turn, force our business owner to raise prices or cut costs (including reducing profits).  If the good being sold is particularly inelastic in the price the customers are willing to pay, then the increase in meat costs must come from reductions in other costs.  Such as extra employees.  Inelasticity will cause customers to stop buying when prices go up, reducing revenue and once again forcing the owner to cut costs...

It's a fascinating topic.

In commerce, it's very rarely a zero sum game were the seller gets something and the buyer doesn't.  In nearly every transaction, both the buyer and the seller walk away with something they wanted.

Government, on the other hand, is almost always such a game.  Government adds costs and creates restrictions that prevent one party or another from getting what they want.

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