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“Job Creator” Defined

Obama delivers economic address at a Maryland Costco
Obama delivers economic address at a Maryland Costco

Politics and urban dictionary refer to a “job creator” as someone who is rich and presumably, one who accumulated wealth by supplying the economy with goods, services, and the needed jobs for production. This definition is in the heart of the current debate on income inequality whereby it is argued that taxing the rich will inhibit the job creator from producing the goods and services needed and wanted in society.

This argument is fundamentally flawed as an economic concept. First of all, many rich people today did not become wealthy because of product and job creation, but rather, came to their wealth from inheritance and trust funds. Take the case of the riches family in the world, the Waltons of the Walmart empire. The founders, the job creators as defined, have passed on and their exorbitant wealth is now in the hands of their survivors, who had no hand in creating the Walmart empire and wealth. Secondly, just creating and producing goods and services no one can afford or buy do not create jobs. Taxing the Walton family more will not bring the economy to a screeching halt.

Economic theories suggest that jobs are created by DEMAND for goods and services, i.e., by consumer confidence, disposable income, and the willingness to spend, that generate the climate and condition for robust economic exchanges (velocity of money) resulting in more products, services, and ultimately, Jobs. SUPPLY for goods and services by itself will not create jobs if there is no demand that includes ability to buy. There has to be a more just and fair allocation of wealth. Besides, a billionaire can only buy so many homes, cars, TV, and vacations, but put the same billion in the hands of ordinary consumers and there will be a buying spree that will spur production and jobs.

Even the government could be a job creator, not because it is rich, but because it could spend on products and services whether it needs it or not and jobs are thereby created. It even spends on weapons the Pentagon does not want or need. It is for this simple reason that during downturns in the economy, the government could fill the demand gap and keep the economy and jobs going. Consumers are the job creators and they need more share of the economic pie.