December 4, 2009

It did not work the first time, so let us try it again

I read in the paper this morning that Pelosi,that economic genius, wants to improve the unemployment situation by giving another stimulus to cities and towns to build "shovel-ready" infrastructure projects and to hire teachers, firemen, and public servants (all of whom just happen to be union employees!).

1. Isn't that what the last stimulus was supposed to do?
2. I love firemen, policemen, and especially teachers. We cannot possibly hire enough of these wonderful professionals to reduce the unemployment ranks in any significant manner.
3. None of these ideas create jobs. The only way to significantly create jobs is to create an environment that encourages a businesses to hire.

GuyK has harped on this for a long time. I even tried to make some of you economically challenged folks understand. I will try again. Businesses do not exist to provide jobs. They are in business to make money. Profit is not a dirty thing. Profit allows a company to buy new equipment, buildings and do the research and development that increases sales. Profit is what allows the business to hire people. When faced with increasing taxes and regulatory costs, businesses will not hire additional personnel. They will reduce the ranks of their workers to make a profit.

On the other hand, the Government produces nothing. It cannot create revenue without confiscating it from another source. Government workers, including teachers, firemen, and policemen do not create wealth. They do not create profit. They do nothing but add cost to government. By the same token I am also mere overhead to my company. I add no direct profit to the bottom line. Like the firemen, I am a cost for the company. We may both be essential (I hope), but in the end we are just costs.

I am always amazed that we elect leaders that have so little understanding of how businesses work. Perhaps, when your entire life consists of spending other people's money with no repercussions, you lose a little perspective.

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