• Enter your email address to follow this blog and receive notifications of new posts by email.

    Join 35 other followers

  • November 2011
    S M T W T F S
    « Oct   Dec »
     12345
    6789101112
    13141516171819
    20212223242526
    27282930  
  • Recent Bookmarks:

  • Archives

  • Categories

Economic Myths Debunked Debunked VI

Before we begin, I want everyone to take a good look at this graph, which took some creative effort with a printer and scanner (because I don’t have money to spend on image editing software):

Ignoring the low quality, can you see a relationship between the two lines presented above? Is the relationship highly correlated? Does one line move with the other? Are the lines inversely related? Does one move up as the other moves down? Something to think about, we’ll get back to this in a moment.

Our last myth from Mother Jones is, in their words, a supermyth.

Myth 6: If you Unshackle the Rich they’ll Rev Up the Economy

Think of this as the supermyth—the one underlying so many other fallacies. But here’s a pesky fact neither corporate America nor the GOP establishment is trumpeting: After-tax corporate profits are currently at an all-time high. The problem businesses face isn’t lack of cash but rather a lack of confidence that consumer demand will pick up in the future. So they’re not expanding or hiring at the rate they should be.

Finally, some agreement (ignoring the hubris it takes to suggest one knows how fast all businesses in the US should be expanding or how many people they should be hiring). Yes, large companies that didn’t go bankrupt after the crash are doing well, and they’re sitting on a lot of money. And yes, a lack of confidence in the future is a legitimate explanation. There’s always a lot of uncertainty when it comes to future events. I would say there is even more uncertainty for businesses right now when you couple the U.S. debt crisis with the European debt crisis with everything else that has been going wrong since the financial world caught fire in 2008. So it’s understandable that businesses who survived a huge economic downturn would be gunshy.

But you know what? We’re missing something from this discussion. With a lot of labor available at a huge discount, startups should be providing the competitive impetus for new growth. But where are the startups? They should be exploiting the gun-shy and conservative strategies of existing businesses. They’re nowhere to be seen. Why is this so? Has something changed? Is it harder to create a new business in America? Is it riskier to hire someone? Is it more expensive to hire someone? Have we created a stable and secure environment for businesses? What is different now than in the past?

I’ll leave it to the reader to answer those questions.

Back to the graph. This is one of those things I found hilarious about this post from Mother Jones. In each myth, they give some ‘proof’ in the form of a graphic to make their point. What amazed me was the disconnect between the graphics and the myths. Look again at the graph I started the post with. Those lines come from the following graphic from the MJ post:

If you look at the two graphs overlayed, it shows that, at least for a while, as profits went up, unemployment actually goes down. Then vice versa. The relationship is somewhat inverse, but it’s not a perfect relationship. Right now, unemployment still struggles to drop while profits are good. But it appears what these MJ bloggers are trying to say is that unemployment is up, somehow because of high profits? or that there is no relationship? I don’t get it. You can see the inverse relationship in the overlay. This relationship only changes once the Dems come into power.

And guess what, that’s the real point the libs aren’t getting. They’re the ones standing in the way of development. They are creating uncertainty. They are the ones making life difficult for the job makers. It’s bewildering how they dance around the truth. The current liberal paradigm is aligned against businesses, either existing or potential, and until there is a change in paradigm or leadership, there is no hope of things getting better.

I’ll end the rant there. I’m not trying to be partisan; politics aside, if people got out of the propaganda business and decided instead on seeking truth, maybe we’d find some.

Advertisements
%d bloggers like this: