That's what he said today on The Kudlow Report !!

What kind of fantasy world is he living in?

Everyone knows that consumer demand for goods creates jobs!

Geez......I hope they aren't payin' that guy much!

Who, me? Or Kudlow?

I'm dead serious........turns out Kudlow was jesting to get the 3 guests into a debate on the economy.

You see, as soon as I heard him say that, I immediately created this thread.

Everyone knows it's the consumer's demand for X that creates the need for a business to hire people to fullfill the need.

A business can't survive without a consumer demand for its product.

Rarely, very rarely, as was the case with the "pet rock" for instance, can business create a demand that was not there before they put the item on the market.

Even before Henry Ford created the car there was a demand for a faster form of personal transportation.

Inventors don't invent stuff that isn't needed. Take for instance the scientist that had just about perfected the way to create oxygen while at Mars. Once the Mars program was scraped, so was his project.

He's now, with venture capital, using that technology to create a new, more efficient & pollutant free way to create electricity for a house.

Even then the business is formed with the anticipation of said consumer demand.

Businesses create jobs in response to the stimuli of consumer demand. And it's not rare at all for businesses to "manufacture" demand. What do you think advertising is all about? Consumer demand for a product might be not the absolute right term, as demand implies a want for a specific item. Consumer "willingness" might be more appropriate. Joe blow was willing to buy a pet rock, but he wasn't demanding it.

Businesses take the risks in offering new products. One such product that comes to mind is the material you can buy to make decks and privacy fencing, that looks like wood but last for so much longer but is so much more expensive.

It's the level of consumer demand for the product that keeps the product alive and creates the need for the business to hire additional employees.

Without an adequate supply of materialistic consumers many corporations would not exist.

Take for instance cell phones. I know young people (under30) who are barely making it & at best have 15% of their net income to do whatever they want with.

Now if you make ($15 an hr* 15%) *2080 hrs per year = $4680.00, yet they will spend $160.00 per month for the cell phone and all the gizmos that catch their eye.

In other words, they are spending 41% of their disposable income on that gadget & they have no idea of what it really costs them.

It is materialistic morons like that, that keep businesses thriving.

Businesses create jobs. I think your using a definition of create that is too limited.

Would jobs exist without business? Yes. Do businesses create jobs? Yes.

I think the correct question is not what creates jobs, but what prevents them from being created. In a completely free market, there is an infinite supply of jobs (I might offer a penny a week for someone to wash my car, for example. Not a job that anyone wants but it meets all the technical specifications of a job, nonetheless). It is the presence of government controls such as the minimum wage and the creations of disincentives to work, such as welfare and unemployment benefits, which creates unemployment.

The idea that "businesses create jobs" seems pretty Randian to me. In fact I'm fairly certain Reissmann argued something similar in his giant tome "Capitalism" but it's been a bit since I read it (and I skipped parts).

I remember he made a very interesting point about the difference between the prices of consumer goods influencing the prices of factors of production in relation to eachother vs the relationship of prices of consumer goods to prices of factors of production for said consumer good.

Iirc the general macro argument was that it isn't consumer time preference (via the interest rate) that establishes the ratio of consumer goods to producers goods in an economy but rather some sort of producer time preference (since they have the option of consuming instead of investing as well).

I'll reread that section and report back once I have doen so.

Okay I rethought this an am retracting it. I don't think businesses create jobs.

Do chickens create eggs or do eggs create chickens? The world will never know, but people who believe that businesses don't "create jobs" also tend to believe the solution to creating more eggs is not to make chickens happier in the hope they may be more productive egg factories, but to instead "stimulate" existing eggs and somehow wrest from them more than one chicken at a time.

Consumer demand is always and ever present and is always and ever literally infinite. Human beings never stop wanting more and more; we never stop wanting a better life. Any attempt to increase something that is already infinite must involve removing something from that which is not infinite and transferring it to the infinite. No matter how much wealth one takes from producers and hands to consumers in a vain attempt to increase an already infinite desire, demand will never increase beyond its current and infinite level.

Producers are the key to wealth because they are transforming our world into a better place in order to meet that endless wave of infinite demand. To imagine that consumers create jobs would be correct but irrelevant to methods for improving the availability of productive work.

businesses are jobs.

Well, sorta. A job is really the direct sale of labor, imo.

busi·ness   [biz-nis] Show IPA
noun
1.an occupation, profession, or trade: His business is poultry farming.

2.the purchase and sale of goods in an attempt to make a profit.

3.a person, partnership, or corporation engaged in commerce, manufacturing, or a service; profit-seeking enterprise or concern.

4.volume of trade; patronage: Most of the store's business comes from local families.

5.a building or site where commercial work is carried on, as a factory, store, or office; place of work: His business is on the corner of Broadway and Elm Street.

It is very relevant because there are people who belive stimulating consumer demand is the most important thing to do in an economy. I think that was also Reissmann's motivation, he wanted to show that it's entrepreneurs that really drive an economy.

I guess we don't use the same definition of wealth.

You think it's material possessions and I think it's ownership of money, valuable commodities like silver & gold, real estate/land.

I am a male, and I remember long ago when I lived in a few large cities, when I enjoyed my "profitable" Saturday mornings hitting the yard sales in affluent neighborhoods.

For instance, I could afford to buy my clothes off the rack. However, why should I, if I could get a suit that is damn near new, for pennys on the dollar?

That is one of the most productive ways in which I, as a consumer, acquired "wealth."

Another way was doing my own maintenance on my vehicles whenever possible. I was lucky enough to have turned 18 in 1972, when it was possible for the average person to do his own maintenance on an engine. Plus, being in the military, every base I was ever stationed at, had an auto shop, where for 50 cents an hr, you could rent a stall with a lift and use all the neat electronic equipment found at your local auto repair facility.

I amassed many a dollar, flipping volkswagens.

I then refrained from spending my new found wealth, whenever possible, and instead invested it.

Producers take the wealth (money) from consumers, they do not make them "wealthy." Producers make themselves wealthy.

If those who purchase $150.00 Nike shoes & I-Pitty Pods with all kinds of gizmos thinks that makes them wealthier than my generation of the 70's, well then I feel sorry for them.

By avoiding the mainstream producers whenever possible, I acquired so much more wealth than I ever could have otherwise.

Under the definition you are using your saying that if I sold you a brand new honda accord for $1 that I have taken wealth from you and you have gained no wealth.

Here's an example of where buying something rather than doing it myself makes me more wealthy. Let's say I can play poker and make 500 dollars an hour. My car breaks and I have two choices: bring it in to a mechanic and have them fix it for 1000 dollars, or do it myself, which will take 3 hours. Which should I do.
When you choose to not pay others to do services for you, you forgo time you could've spent doing more wealth productive activities.

"By avoiding the mainstream producers whenever possible, I acquired so much more wealth than I ever could have otherwise."

Actually, you acquired a lot of "wealth" because you spent all your time working by finding a plethora of different ways to make money.

Also, if ownership of money is wealth in your definition, than everything that can be exchanged for money is wealth, and almost everything can be exchanged for money.

I'd say that if a consumer buys something from a producer both are wealthier than before (it is of course possible one party later regrets the exchange and would concider themselves less wealthy than before).

yes........if I coulda got a well maintained one in a yard sale for a nickel. I have no need for a "new" honda.

I remember reading an article a very long time ago, concerning the spending habits of self-made millionaires. Approx. 52% of them did not purchase new vehicles. All of the cars they owned were 1.5 yrs old on avg when they purchased them.

Over 65% of them commuted to work in a vehicle that they purchased used.

duh............

I don't consider soap detergent, toilet paper wealth. I don't even consider a television as wealth. A t.v. is a luxury. The minute you accept it as yours and start using it & give up the chance to return it to the store, it is worth so much less than what you paid for it.

A new car is worth thousands less, once you drive it off the lot and retain possession to that point in time in which you have no legal right to return it.

I wish more people understood this...

This whole thing is ridiculous. Supply creates demand and demand creates supply. In fact, supply IS demand and demand IS supply. They are opposite sides of the same coin. The Marshallian Scissors cuts with both blades.