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Businesses Aren’t Job Creators

“Hiring more people is a course of last resort for capitalists.  It’s what we do, if and only if, rising consumer demand requires it.”  ~Nick Hanauer

I have been skeptical of the “job creation” rhetoric that is often boasted by politicians.  When you turn on the TV and see Democrats and Republicans arguing about who creates jobs I somehow find myself rolling my eyes and muttering under my breath, “here we go again”.

I have believed that it is not the responsibility of a business owner to hire people.  Businesses are designed to be as efficient as possible and create as much with as few resources as possible.  I also don’t believe that giving them tax incentives to business people (or rich people by association) will lead to hiring.  The objective is to not add cost and put people to work, it is to grow and efficiently convert resources into a product.  A business should not be concerned with hiring people; it should be focused on running its business.

Now, businesses should be the number one source of creating jobs, but that should be a by-product of growth and demand (and that’s consumer demand, not “job demand” aka unemployment).  So who should be creating jobs?  You and me.  We should be creating jobs through our demand for products and services.  When we spend, businesses will compete for our money.  When you and I buy more, then businesses will have a reason to grow and use more resources (including people) to supply our demand.  Thus, consumer demand will fuel demand for employment.

So the next time a politician wants to talk about “job creation”, tell them to stop spending so much money talking about jobs and, instead, have them go buy some clothes or a car or even trash bags to create some jobs.

This post was inspired through a connection with Nick Hanauer’s TED talk:  http://www.youtube.com/watch?feature=player_embedded&v=bBx2Y5HhplI

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