Job creation: businessmen and consumers

Discussion about businessmen being responsible for job creation has always kind of irked me. While it is true that you cannot have jobs without some sort of business, touting businessmen as job creators seems a bit too simplistic for me.

It ignores the raison d’etre of business. Businessmen aren’t in the business of creating jobs. That is a side effect. One may even say a necessary evil. The goal of businessmen, especially those indebted to shareholders, is to maximize profits. Do you maximize profits by hiring employees (= job creation)? Only in so far as the business is experiencing too much demand for its services or products and requires more employees to meet the demand.

Too often we see businessmen maximizing profits through reducing costs, and costs include wages and benefits for employees. Businesses naturally shed jobs in times of reduced consumer spending. Shedding jobs is antithetical to job creation.

Note a few lines earlier I pointed to the fact that businesses hire in response to demand for their services or products. Demand comes from consumer spending. Consumer demand. Not a lower corporate tax burden. Not even a lower tax burden on the wealthy consumer. (After all, the wealthy consumer can only consume so much.)

Now, how can you and I afford to spend? We need to have adequate wages that will allow for discretionary spending. (Remember Henry Ford paying his workers enough so they could actually be consumers of the product they manufactured?)

Businessmen are by nature reluctant job creators. They only create jobs as a reaction to conditions. Consumers—you and I—fuel the job creation engine through spending. We create the conditions for job creation. Businessmen are then forced to hire based on these conditions. It is a symbiotic relationship.

Is this view too simplistic? Have I just replaced one quasi-myth (businessmen as the engine behind job creation) with another (consumers as the engine behind job creation)?


Your thoughts?

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