Just saw a comment on this article by Luke Joseph. I think it is an interesting topic of conversation... It is often the case that people have a good point, but use flawed logic to convey it. This is extremely common, when people are arguing about economics… This article tries to make the point that “rich people don’t create jobs.” This statement alone has too little information to be either right or wrong. I believe this article is trying to showcase the economic concept of Marginal Propensity to Consume. By saying that rich people do not create jobs, they writer is basically saying that cutting taxes for the rich does less good for the economy than cutting taxes for the poor would. That statement is closer to the point the writer is trying to make because there are various reasons why someone with a high stock of wealth or high income has less incentives to invest their money than someone who is “poor”. The writer also argues that economies create jobs, not the rich. This argument is not incorrect, but is flawed. If the rich play a role in an economy, which creates jobs, then the rich create jobs. He should instead analyse this in a vacuum. My friend made the analogy of a Quarter Back and his wide receivers; I think he is right on the money. It is true that Peyton Manning cannot score if there is not someone there to catch the ball, but when someone makes the argument that Peyton Manning is better than another QB, they are basically saying that they think that another quarterback, in the same exact team, under the exact same circumstances, would not be able to lead an offence as successfully as Peyton Manning (Ceteribus Paribus). Thinking of producers separately to see which create jobs is a ‘chicken and egg question’ especially because it does not see that to consume, one must produce. In summary, the statements of “people create jobs” or its antithesis can both be correct, but BOTH are extremely misleading and lack substance. ENTREPRENEURS Create jobs using money they raise from INVESTORS to produce a product that BUYERS want to buy. How capital flows in that interaction is the issue the writer is trying to tackle, but spends very little time doing so. I agree, capital should flow to the side that his more likely to put it to use and do so faster. Here is another related thought: Most people who use incentives to argue about economics are also right, but fail to see the whole picture. It is a FACT that incentives drive production, but there are also incentives to not produce on both extremes of the political spectrum. If I will make the same result as a “lazy” person, I have little incentive to work hard (the expected return on my effort is very low). Unfortunately, there is also the case where if I know that my chances to get what I want are low, despite of my effort, I will also have little incentive to work hard (again, the expected return on my effort is very low). businessinsider/rich-people-create-jobs-2013-11
Posted on: Mon, 02 Dec 2013 19:09:36 +0000
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