Wednesday, January 11, 2012

This is where giving money to "Job Creators" goes wrong!


This is where we go wrong.  Believing that the industrial age brought goods and services.  It didn't!  What goods and services could any industry bring anyone,  if no one could afford them?  Henry Ford made cars because he hoped he could find a market for them,  not just by selling them to people who could afford them,  but by making the cars cheaply enough so that more people could afford them.

Before Henry Ford set up his assembly line production methods,  people were making cars,  but since only the wealthy could afford them,  they would not make very many.  Part of the high cost of owning a car was,  because there were so many "proprietary" models,  you could only get parts from your cars maker,  who owned the specifications and knowledge needed to make repairs to their product.  So they could charge whatever they wanted and you had no choice but to pay.  Henry Ford,  not only standardized the parts,  he also raised his employee's wages,  to make them his customers and a sales force of sorts as well.

Republicans want you to think that someone,  anyone,  can simply create a new product and presto the jobs appear.  How many new products,  over the years,  have been created,  for which no market could be found?  Or which no market would support?  Scads!  The products either cost too much to find a wide enough market,  or ran up against competition from people who were able to produce it cheaply enough,  to find wide market acceptance. 

Betamax was superior to VHS,  but the makers refused to lower their prices,  to where the average person could afford it.  So,  the lesser VHS,  came in cheaper and was snapped up by the masses.  The producers of movies and shows saw the VHS market swelling,  while the Betamax market was slow and stagnant,  so they began producing movies and shows in VHS format.   By the time Betamax decided to lower their prices,  few if any users owned any of their machines.  So there was less produced to play on that format.  Mostly they'd sold Betamax to producers who needed their higher quality for production.   Unfortunately these "rich" consumers,  weren't enough to support mass marketing of the Betamax machines,  so they went out of business,  creating no new jobs,  and in fact costing many people their jobs.

This is where we are today with our entire market.  New products are few,  because consumers who can afford them are few.  In fact,  many products that already had a wide market,  are too expensive now that so many people have lost their jobs,  so the products have lost their market.   When you have to front millions of dollars to bring a new product to market,  you'd better be sure that there are millions of consumers clamoring for it.  If not,  you'll soon be bankrupt,  even while millions of people stand,  looking in store windows,  wishing they had the bucks to buy it if they could.  If these big mfg's lose money they've borrowed from banks,  then the banks must tighten their lending.  That means more lost jobs all around.

So,  as you can see,  new products alone don't create new jobs and may take jobs away!  Keep giving money to "job creators" who have no market and you're just wasting your money!  Sure,  they'll bring new products to market,  but with only the 1% able to afford them,  they'll soon be filing for bankruptcy,  costing their bankers and investors money and forcing them to tighten up on new lending.  Which puts existing jobs at risk.

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