Tuesday, July 5, 2011

Will $1 Billion Create 7000 Jobs? Yes and No


Joe the Barber.  One man shop.

Customer: Sam

Sam gets his haircut every week.

If Joe hires another barber, will Sam get his hair cut twice a week?  No.

If Jack starts going to Sam’s barber, Joe the Barber will hire another barber.



Because Sam is vain, Joe the Barber uses up a can of hairspray doing Sam’s hair.  Will he buy two cans of hairspray to do Sam’s hair?  No.

However, if Jack is also vain, Joe the Barber now will buy two cans of hairspray.  One to do Sam’s hair, one to do Jack’s hair.

Since Joe the Barber doubled his order of hairspray, Willie the hairspray salesman will order more hairspray from the River City Hairspray Company.

The River City Hairspray Company now must order more spray cans for their hairspray.  The River City Spray Can Company now must order more steel to make spray cans.

Because Joe the Barber’s business has picked up, the money, please forgive the expression, trickles up.  This is trickle up economics.

Those who believe that this is supply side economics are only half-right.

We are not offering major tax cuts to make products cheaper so more consumers can buy them.

We are offering major tax cuts to those people who get haircuts, buy shoe-laces, Q-tips, detergent, cat food, newspapers, aluminum foil, Pizza, M&M’s, potato chips, oatmeal cookies, caffeine- free diet Pepsi, Chinese takeaway, candles, CD’s, DVD’s, ketchup, key-chains with their names on them, and so on.

Can A Billion Dollars create 7,000 jobs?  That depends.  Where does this money come from?  The vaults of the wealthy that are hoarding their ill-gotten gains while the world suffers?  The people whose hoarding is purported to be causing all this misery?  If they spend their billions, will that create the 7,000 jobs?  Only if the rich guy gets 7,000 haircuts a week. 

You know that idea floating around that those big corporations must spend their money to create jobs.  That is trickle down economics.

What this country needs is trickle up economics.  Money put into the economy by people who spend the money on Main Street.


Addend√¶: 

Two ways to put money into the economy and create jobs.


Number 1.

Tax Peter $5,000.

Give $5,000 to Paul to create a job.


Number 2.

Don't tax Peter $5,000.

Tell Paul, "When you calculate your taxes, knock off $5,000 from what you owe Uncle Sam--If you created a job."


There is a vast, but fathomable difference between methods one and two.
 


Sincerest regards,

Slim

Please Read, the Multiplier Effect.  My ppt. presentation on SlideShare.


However, to understand this even further, please read Economic Stimulus by Metaphor


 Sincerest regards.



Copyright © 2011 Slim Fairview