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View Diary: Quick-Fixing Jobs Is a Snare and a Delusion (180 comments)

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  •  Tax Cuts Directly Increase Profitability (3+ / 0-)

    of businesses in a manner similar to increased productivity does.

    The indirect benefit to employment may, in the case of increased productivity, eventually force the employer to hire more workers when his present staff's ability to meet demand is maxed out.  That, in turn, may lead to increased wages for workers as the labor "shortage" begins to drain the labor pool and must make an attractive offer to keep the potential worker from going elsewhere.

    But it could just result in labor being off-shored, to no direct benefit to the American citizen who is unemployed.  

    Tax cuts follow essentially the same scenario, allowing the business to keep more of its profits, creating a stash that need not be spent on increased payroll.  Our experience is that is exactly what happened in the wake of Bush tax cuts.

    The way to solve unemployment is to create jobs through government infrastructure projects.  Large projects like Interstate repair, bridge ditto, public buildings construction, and alternative utilities development, etc.  The trickle down from large government projects is sub-contracts to local and regional businesses who will have to hire workers in order to fulfill the obligations of their government contracts.

    Once the critical mass of new jobs is created under government stimulus of that nature, the resultant increased wealth leads to consumer spending which, in turn, stimulates and supports smaller businesses that are either satellites to big government projects, or not.

    Eventually the economy revives, becomes stable and self-sustaining, community tax revenues increase, and the economic cycle returns to normal as the government projects wind down.

    In short, direct jobs creation is the tautology that creates jobs.

    "Give me but one firm spot to stand, and I will move the earth." -- Archimedes

    by Limelite on Thu Dec 03, 2009 at 11:32:09 AM PST

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