Businesses Do Not Create Jobs

This was posted by  Dave Johnson, on  November 11, 2010 t the Our Future.org website, which is
The Campaign for America’s Future a center for the progressive movement. Our goal is to forge the enduring progressive majority needed to realize the America of shared prosperity and equal opportunity that our country was meant to be.

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Businesses do not create jobs. In fact, the way our economy is structured the incentive is for businesses to get rid of as many jobs as they can.

Demand Creates Jobs

A job is created when demand for goods or services is greater than the existing ability to provide them. When there is a demand, people will see the need and fill it. Either someone will start filling the demand alone, or form a new business to fill it or an existing provider of the good or service will add employees as needed. (Actually a job can be created by a business, a government, a non-profit organization or just a person doing the job, depending on the nature of the good or service that is required.)

So a demand creates a job. A person who sees that houses on a block need their lawns mowed might go door to door and say they will mow the lawn for $10. When houses start saying "Yes, I need my lawn mowed" a job has been created!

Demand also creates businesses. The person who is filling demand by mowing lawns for people might after a while have a regular circuit of houses that want their lawns mowed every week, and will buy a truck and a new mower and hire someone to help. A business is born!

Businesses Want To Kill Jobs, Not Create Them

Many people wrongly think that businesses create jobs. They see that a job is usually at a business, so they think that therefore the business "created" the job. This thinking leads to wrongheaded ideas like the current one that giving tax cuts to businesses will create jobs, because the businesses will have more money. But an efficiently-run business will already have the right number of employees. When a business sees that more people are coming in the door (demand) than there are employees to serve them, they hire people to serve the customers. When a business sees that not enough people are coming in the door and employees are sitting around reading the newspaper, they lay people off.

Businesses want customers, not tax cuts.

Businesses have more incentives to eliminate jobs than to create them. Businesses in our economy exist to create profits, not jobs. This means the incentive is for a business to create as few jobs as possible at the lowest possible cost. They also constantly strive to reduce the number of people they employ by bringing in machines, outsourcing or finding other ways to reduce the payroll. This is called "cutting costs" which leads to higher profits. The same incentive also pushes the business to pay as little as possible when they do hire. (It also pushes businesses to cut worker safety protections, cut product quality, cut customer service, "externalize" costs by polluting, etc.)

This obviously works against the interests of the larger society, which wants lots of good jobs with good pay. And businesses, while working to cut jobs and pay less, need other businesses to hire lots of people and pay well, because that is what creates the demand that makes all the businesses work.

Government To The Rescue
This is where government comes in. Government is We, the People, working for that larger societal interest. In our current system -- when it works -- we use government to come up with ways to balance the effects of the profit motive -- which pushes for fewer jobs at lower pay -- with our larger need for more jobs at higher pay for us, and for the good of all the businesses. We, through our government, create and regulate the "playing field" on which businesses operate. We set minimum wages, limits on working hours, worker safety rules and other rules designed to keep that balance between profit incentive and demand, and that playing field level. (We also provide the infrastructure of roads, schools, courts, etc. that is what makes our businesses competetive with businesses in other countries. The individual interest in paying less taxes for this has to be balanced with the larger interest that we all pay more for this, but that is another post, titled, "Tax Cuts Are Theft.")

Corrupted
Obviously businesses in our system must be kept from having any ability whatsoever to influence government decision-making in any way, or the system breaks down. When businesses are able to influence government, they will influence government in ways that provide themselves - and only themselves - with more profits, meaning lower costs, meaning fewer jobs at worse pay and not protecting workers, the environment or other businesses. And, they will fight to keep their ability to influence government, using the resulting wealth gains to increase their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government which increases their wealth which increases their power over the government ...

Unfortunately this is the system as it is today and unless we pay attention it will not change..

The Pension debate

Naïve citizens might have thought a significant issue of this nature affecting the retirement incomes of just about everyone would have been discussed extensively here in Canada beforehand – perhaps even debated in our antiquated parliament! Apparently. Harper just couldn’t wait to debut his super-secret plan to gut pensions (in mysterious, as yet undisclosed ways) while self-righteously scolding spendthrift world leaders at an elite Swiss resort. The truth is, a solid majority of Canadians in their peak earning years do not or cannot afford to make annual contributions to the primary retirement savings instrument (RRSP) and only 12% of those in their 40s make the maximum allowable contribution. Of those in their 50s, only 14% make the maximum contribution.

Is the fog coming off the mirror yet? The Harper plan for "prosperity" is to rob seniors of their past tax payments and give it to the wealthiest portion of the population. Source: http://redtory.wordpress.com/

In order to sell this plan to the Canada people Harper will use all of the tools at his disposal.  For disinformationalists such as Harper, the overall aim is to avoid discussing evidence which cannot be broken by truth, but at all times, to use clever deceptions or lies to make select links seem weaker than they are, create the illusion of a break, or better still, cause any who are considering the chain to be distracted in any number of ways, including the method of questioning the credentials of the presenter. Please understand that fact is fact, regardless of the source. Likewise, truth is truth, regardless of the source.

Here's the full text of the memo sent out as speakers points to counter the growing online opposition by progressives to Harpers plan to destroy our pension system. The text from the memo is in italics and my comments are in bold and non-italics.

Source: http://www.cbc.ca/news/politics/inside-politics-blog/2012/01/pmo-infoalerte-watch-so-about-that-old-age-security-media-speculation.html January 27, 2012 12:57 PM  By Kady O'Malley

From: Alerte-Info-Alert [PMO]

Sent: Friday, January 27, 2012 11:46 AM

Old Age Security
Media are speculating that the federal Government may make changes to Old Age Security.
The following comments use the following two rules of disinformation Invoking authority and the Rule of Become incredulous and indignant,

Our Government is committed to ensuring the retirement security of Canadians.

The Harper Government will ensure that seniors maintain ALL the benefits they currently receive.

To be clear: there will be no changes to the benefits seniors currently receive.

(It would appear to me that the writer of this statement assumes the reader is almost illiterate and because of this the writer has to repeat the point. It also means to me that there will be changes coming down the road, after we see how the public buys the idea that taking away old age security of younger Canadians is ok)

The following comments use the following rule of disinformation Establish and rely upon fall-back positions. (In this case, the fallback position is that the government will give proper notice, etc.) Done properly, this can garner sympathy and respect for 'coming clean' and 'owning up' to your mistakes without addressing issues that are more serious.

We will ensure any changes are done with substantial notice and adjustment period and in a way that does not affect current retirees or those close to retirement, and gives others plenty of time to adjust and plan for their retirement.

(Note they have not defined substantial notice and adjustment period or what is meant by those close to retirement, and they are not about to because they want this done and over before the next election

The following comments use the following rule of disinformation Change the subject. The government is trying to find a way to side-track the discussion in hopes of turning attention to a new, more manageable topic. This works especially well with companions who can 'argue' with you over the new topic and polarize the discussion arena in order to avoid discussing more key issues

In Canada, there are two important programs that provide financial support to older Canadians: CPP/QPP and OAS. (Notice the switch of topic from Old Age Security to the Canada Pension

CPP is funded through premiums that working Canadians pay with each paycheque and is on a secure and sustainable path. It does not need to be changed.

The following comments use the following rule of disinformation Fit the facts to alternate conclusions

OAS is funded primarily through taxes on working people and is unsustainable on its current course. For example: (Notice how they build the facts to lead to the conclusion they want you to draw)

• The number of Canadians over the age of 65 will increase from 4.7 million to 9.3 million over the next 20 years.
• The OAS program was built when Canadians were not living the longer, healthier lives they are today.
• Consequently, the cost of the OAS program will increase from $36B per year in 2010 to $108B per year in 2030.
• Meanwhile, by 2030, the number of taxpayers for every senior will be 2 - down from 4 in 2010.

If we do nothing, OAS will eventually become too expensive and unsustainable.

Alternative analysis from the galloping beaver and The Bulldog are interesting reads at this point

The Old Age Security only consumes about 2.41 per cent of GDP, much lower than in most countries. In 2031 at the top of the baby boom retirement demographic, the OAS will consume only 3.14 per cent of GDP. That’s a lot of money, but it is not a catastrophe. Source: The Bulldog by Ken Gray

The Cons' estimated total cost is about $108 billion. But based on Statistics Canada's medium-case demographic estimates, seniors ages 65 and 66 will make up only 11.5% of the total population aged 65 and up as of 2031.

So if OAS is relatively evenly applied across the age spectrum, the savings from pushing back the retirement age for Canadians in general will amount to 11.5% of $108 billion - or just over $12 billion per year.

Then he takes aim at the real plan. The Harperites promised that, once they have balanced the budget, as long as you have a large enough income, you can increase the amount of money you put into a Tax-Free Savings account from the current $5,000 to $10,000 annually.

At the same time, the Cons plan to push through general income splitting and increases to tax-free savings accounts. And those plans - targeted squarely at large-single-income households and those wealthy enough to have $10,000 to sock away every single year - will cost...just under $12 billion per year. And unlike the Cons' numbers for OAS, that's without taking into account any growth in the size of the tax base in the meantime. 

Just so we're clear here, the cost of the Harper frat-boys' plan to allow income splitting in high-earning-single-income households and to double the amount that those with a spare ten-thousand bucks laying around can shelter from interest and investment income taxes is about the same as would be saved by forcing seniors to delay an old age benefit until they reach aged 67.  Source: http://thegallopingbeaver.blogspot.com/ .

The following comments use the following rule of disinformation Invoking authority

Our Government will act to protect OAS.

We will not put the financial security and well-being of our seniors at risk.

We will take balanced, responsible, and prudent action to ensure OAS remains sustainable for future generations of Canadians.

The following comments use the following rules of disinformation False evidence, Manufacture a new truth, and Invoke Authority. Citing their own expert(s), group(s), author(s), leader(s) with  testimony which concludes favorably.

Background - Retirement Security
Since 2006, we have:

• Increased the Guaranteed Income Supplement for the most vulnerable seniors
• Introduced pension income splitting and increased the age credit
• Introduced innovative new programs such as the tax-free savings account and the PRPP to help Canadians save for retirement.

As a result of our actions, seniors can individually earn approximately $19,000 per year or $38,000 as a couple before paying federal taxes.

What the government doesn’t say:

According to the Department of Finance Tax Expenditure and Evaluation Guide, savings held in Tax Free Savings Accounts lowered Canadians’ taxes by about $45-million in 2009 and $155-million in 2010. The Conservative Party’s plan to double contribution room from $5,000 a person per year to $10,000 is estimated by them to cost only $30-million Source : How TFSA expansion will hit future tax revenues Source: Kevin Milligan Globe and Mail Blog  Posted on Thursday, April 7, 2011 6:50PM EDT

In the following items the government uses the following rule of disinformation

Silence critics. (If the above methods do not prevail, consider destruction of their character), False evidence (Whenever possible, introduce new facts or clues designed and manufactured to conflict with opponent presentations) Emotionalize, Antagonize, and Goad Opponents. As they cannot do anything else, they will chide and taunt their opponents to  draw them into emotional responses which will tend to make them look foolish and overly motivated, and generally render their material somewhat less coherent(

Lines to Define the Expected Opposition Attack
We know the Opposition will attack any adjustments to the OAS program.

We know their approach. It's the same tired (failed) approach to deficits and debt that led to the economic crisis in Europe.

The NDP prefers a "head in the sand" approach - ignore the problem until it is too late to save OAS benefits.

Their irresponsible, reckless, and dangerous approach to Canada's finances would put the entire OAS program at risk.

The NDP would put at risk the financial security of millions of middle aged working Canadians - all future generations - who are planning on OAS being there when they need it.

It demonstrates that the NDP is too dangerous for Canadians planning for their retirement.

Harper wants to frame the conversation about pensions with the idea that Canada will  have to take tough measures now or we will end up in a mess like the US or the European common market. This is the frame that the Conservatives will try to impose during this spring sitting of the House of Commons,  It's a powerful frame, and was largely responsible for Harper's majority election win, but this time I don’t think Canadians will be prepared to buy into his ideas.

Harper starts to show his true colours

Back in August I talked about how Harper would start to reframe the pension debate, as Harper has said that he will change the way we finance our pensions, perhaps it is time to consider taking some action. Here is part of what I said in August 2011

So why is Mr. Campbell raising the issue at this time, I think it is to start to frame the agenda so the right wing agenda of Mr. Harper and his supporters can shift public thinking to the idea that we have to be prepared to have less services and less income. (The following is taken from Why Stop Harper website)

Although seniors’ incomes have dropped for the first time in decades, it is clear the Harper government is laying the groundwork to replace Canada’s well-run, cost-effective, and stable CPP with a private, more expensive pension scheme – the Pooled Registered Pension Plan (PRPPMallick: “When Prime Minister Stephen Harper, Finance Minister Jim Flaherty, the government of Alberta and insurance giant Sun Life all agree that a national privatized pension plan is a great idea for your retirement, be very afraid. Feel your fear and let your anger flower.”

According to Sun Life Financial, Canadians are much less optimistic about retirement – and the average Canadian expects to retire at age 68, three years later than reported a year ago. The confidence level of working Canadians slumped to a low 39 in 2011, from 50 in 2008 and 51 in 2009. At the end of 2009, Canadians still believed recovery from the recession would be quicker than they now believe, but unemployment remained relatively high.

When older workers stay on the job it affects the labour market, resulting in fewer job openings and increased competition for younger people. Canada’s youth jobless rate is 14.4 per cent.

In the 2011 federal budget, responding to demands by the NDP, the government offered low-income seniors an extra $300 million annual enhancement to the Guaranteed Income Supplement. The NDP had requested $700 million.

The government ignored the NDP’s request for a doubling of CPP benefits.

Harper’s Income Trust “betrayal.” In 2005, Harper wrote: "Income trusts are popular with seniors because they provide regular payments that are used by many to cover the costs of groceries, heating bills and medicine." Then, without notice or consultation, he terminated them.

So to move along the agenda to reduce and attack Senior benefits, the right needs spokespeople on Radio, and TV (Corus radio and Dun tv) to start to frame the agenda on pension and health care so that over the next few years the public will start to believe the big lie (remember the right has learned from the past, while the left still believes in an honest approach) and the frame will shift. Don't forget that Steven Harper still has his agenda and will take steps to carry it out, he is a very patient and evil man.

Remember that Steven Harper helped found and was

President of the National Citizens Coalition, founded in 1967 to oppose Medicare, he supported US-style bank de-regulation. In his first budget, Finance Minister Flaherty invited “new players” into the Canadian mortgage market, offering greater choice and “innovation,” thus lowering mortgage insurance standards – the US recipe for disaster. Nevertheless, since the 2008 Financial Crisis, Harper has been taking credit for the relative strength of our financial sector, based on a system he inherited, but didn’t support.

Harper wants the federal government to abandon certain financial and administrative responsibilities – returning to an era 50 years ago before our nation-building social programs. Instead, his government “will look to innovative charities and forward-thinking private-sector companies to partner on new approaches to many social challenges.” Victorian England?

Harper thinks Medicare is provincial and wants to break it up. While heading the National Citizens Coalition, Harper said “the feds” should scrap the Canada Health Act. He doesn’t dare repeat that now, but he rules as though the law guaranteeing Canadians universality, portability, accessibility, and more doesn’t exist. Measures to encourage the provinces to comply with the Act aren't being enforced

These twp blog paint a very interesting picture of where Harper is coming from and where he intends to take this country, they are both worth a read.

The Canadian Manifesto: The Politics of Obscurantism: First You Obstruct 

 Montreal Simon: Stephen Harper and the Hour of Darkness

The Spin continues

I read two interesting accounts today about what Andrew Frank said. The first  was from the Wall Street Journals MarketWatch, which started with this statement"ForestEthics has sent a statement to supporters confirming the veracity of Andrew Frank's claims that the Government of Canada targeted the environmental group.  In an email sent to supporters yesterday afternoon (January 25), ForestEthics co-founder, Valerie Langer confirms the veracity of Andrew Frank's claims"

The second report was Straight.com, which started with this statement "An environmentalist claims that Stephen Harper's office threatened to revoke Tides Canada Foundation's charitable status, but the group's CEO says that this comment is "inaccurate".

Interesting spin being put on this issue by these two sources. The Straight is interested in the effect that muzzling of this charity will have on other charities,  and wonders what other groups the government will go after. This article ends with the following statement:
"If Frank's whistle-blowing allegation is correct that the Prime Minister's Office threatened Tides Canada, then one wonders who might be next on the government's hit list.

We all know that Stephen Harper can't be trusted to play fair with anyone he perceives to be an enemy. Maybe it's time for the NDP leadership candidates and Liberal Leader Bob Rae to propose a long-term solution to prevent prime ministers from throttling registered charities for partisan political purposes. The best way to do that would be to craft legislation to create an independent charities commission."

The Wall Street Journal article discusses the letter in light of the governments contempt for freedom of speech and  ends with this statement "Andrew Frank's original open letter ( http://www.scribd.com/doc/79228736/Whistleblower-s-Open-Letter-to-Canadians  ) to Canadians has been read more than 55,000 times since Tuesday morning (January 24), sparking an online movement to reveal the truth and hold the government to account for its contempt of the most basic rights of Canadian citizens, including freedom of speech and freedom of expression"