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One of the conservative sound bites one hears so often is, "Every dollar that goes to the government is a dollar that businesses don't use to create jobs".

There are several gaping holes in this claim.

For one thing, we know that after the financial crisis hit, lots of corporations were sitting on huge piles of money they didn't use to hire the jobless.  This week the Dow Jones stock index hit new record highs, but unemployment is still high.  The fact a company has money does NOT insure it spends it on jobs.

More money for corporations can mean LESS jobs for people.  That money can be spent to automate their business - buying machines to do what people used to be paid to do.

When you talk about whether money goes to a government or a company, that government has responsibilities over a certain geographic area.  So, it's reasonable to ask where the company would spend the money if the money went to it.  Why should the US government, for instance, pass up revenue so a company can get money to hire people in Thailand or build a factory in Indonesia?

If not getting the money prevents the company from hiring, not getting the money prevents the government from hiring.  When a government receives revenue, it doesn't send the cash to an incinerator, it spends the money - sending it back into the economy.

Will the government spend the money in ways we approve of?  You have an equal say at election time to try to suggest what policies you prefer.  Unless you own LOTS of stock in a corporation, you don't have any real influence.  You can phone your elected officials' offices or visit them in person to tell them what kind of spending you want.  Most of us can't talk to or visit the officials running a company.  It's even possible to sit in a viewing area and watch a legislature in action.  What are the chances of sitting in at a meeting of corporate managers or the board of directors?  You can run for public office and might become president, governor or mayor.  You could try to work your way up to being CEO of a corporation, but even if you got there you'd only be making policies for one company - not for an entire country, state or city.  So, the vast majority of people have more say when the money goes to the government.

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It may also be worth asking, "If the money goes to the company, exactly who at the company should it go to?"

Adam Smith pointed out that if that money goes to higher profits, it will contribute more towards higher prices than if it goes to higher wages:  “In regards to the price of commodities, the rise of wages operates as simple interest does, the rise of profit operates like compound interest. Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

Adam Smith also said that higher wages are simply fairness:  "It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged."

Yet, businesses are neither hiring enough people to dramatically cut unemployment nor are they substantially raising wages.  Once upon a time, in a land far, far way where fairies and talking animals lived, perhaps companies spent their money hiring the jobless.  But in the real world, that's just a fairy tale.

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