Friday, December 2, 2011

Demand-side economics makes sense

"I’ve never been a 'job creator.' I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate. That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be."

All my life I've heard "supply-side economics" pushed as the most useful economic theory. This means that you stress those companies and people that produce things as the engine that makes our economy works. But this never really made sense to me, because what if people don't buy?  You can wind up with warehouses full of stuff and still if no one buys, what is the point?  So I'm happy to see demand-side economics explained and promoted.

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