JOBS: Why stimulus hasn't worked

Gary Edwards made the Keynesian argument that “Businesses don’t create jobs, customers create jobs.”

Saying that demand creates jobs is like saying hunger creates food. Demand without supply only causes prices to rise.

The essential element required to create a job is that someone must take a risk with capital. Capital can be in the form of labor, money, inventory, tools, raw material, etc.

The corn farmer must buy the seed, plant the seed, tend the field and harvest the crop BEFORE he sees payment for his labor and a return on his investment in labor and seed. The buyer takes no risk when they trade money for corn.

If the farmer is to take the risk then there must be a reward. We call that reward “profit.” If you take the profit away in taxes then you remove the incentive to take the risk. Without the risk there is no job. Without the job there is less corn. The price of corn goes up and the poor suffer.

The more capital that is in the hands of the private citizens, the more people will be willing to take a risk and the more supply we have. The more the supply the lower the price and the more the poor benefit.

Taking cash from risk-takers and giving it to consumers causes prices to rise on a smaller pool of goods and the overall prosperity of the society diminishes. This is why the “Stimulus” spending resulted in higher prices and fewer jobs.

BRENT REGAN

Coeur d’Alene