Job Creators; More Thoughts

I subscribe to the Liberal notion that the term “Job Creators” as used by Conservatives is code for wealthy individuals. I don’t believe there is a direct correlation between wealth and creation of jobs.
The legitimate quest of business, particularly manufacturing, is to do as much as one can at as low a cost as possible. So there is always a search for ways to reduce, not increase, jobs since much of the cost is in labor. Though much of the shrinkage in jobs, particularly higher paying jobs, in recent years is attributable to technological advances, during an economic downturn falling profits amplify the need to reduce labor and workers are pushed to increase their individual efficiency. With workers fearing for their jobs, the task is easier. Corporations have been extremely effective in reducing jobs during this recession as is evidenced by record profits. There is nothing wrong with this. That is how the system is supposed to work. So, in this sense, the people running business are not focused on “job creation” and should not be considered “job creators”. However, their attempt to increase the value of the enterprise is often accomplished through growth and growth can create jobs so if they create more through growth than eliminate through efficiency, they may be “Job Creators” coincidentally but certainly not by intent.
Much of the wealth today, however, is derived from investment and speculation in the stock markets. Are these investors also “Job Creators”? The fact that most laymen overlook is that when one buys shares in the stock market, with few exceptions, one is buying them not from the corporation but from another individual who owns shares in the company. The corporation is not at all involved in the transaction and the benefit to the corporation is only tangential at best. If many people buy shares it may increase the paper value of the corporation, which may make it easier for it to borrow money or issue more shares. But unless it does either of those, my buying the shares puts no money into the corporation and is inconsequential from the standpoint of creating jobs. So unless I am buying shares from a corporation directly, either through an IPO or new issue, I am not adding capitol to their coffers and even with a stretch cannot be considered a “Job Creator”
What about private equity firms? Are they “Job Creators”? Private equity firms gather money from large investors and operate somewhat like investors in the stock markets except having large amounts of capital they generally take controlling positions in corporations but are not subject to regulations imposed on the public markets. Bain Capital, a private equity firm headed by Mit Romney is used by Liberals to argue against Mit’s claim to being a “job Creator”. They purchased select companies that were flush with assets and unprofitable, convert the assets to cash for the investors, streamlined the operation by eliminating jobs and either took them into bankruptcy or sold them. Their gain comes from stripping assets and/or improving efficiency (by cutting labor) thus increasing profits and the value to the investors. Here again one cannot considering them “job creators”.
Governments, federal, state and local also employ labor, in administrators, teachers and public service and safety personnel. Though they provide jobs, they do not create jobs with the exception of the military and foreign policy activities. Unfortunately this job creation occurs during times of war and global stress. During war the federal government not only hires soldiers, but increases their purchase of weapons. Many foreign policy activities involve providing aid in the form of weapons to countries like Pakistan and Israel or allowing sale of weapons to Saudi Arabia and Taiwan to mention a few. These activities do create jobs but not necessarily the kind of jobs we want to strive to create.
So who are the real “Job Creators”? Venture capitol firms raise money from large investors and invest it in new enterprises or new projects in existing ones. They take on much greater risk than private equity firms and their successes do indeed result in new jobs. They and individuals invested in venture capital firms are truly “Job Creators”.
A very large portion of our GDP comes from consumption and ultimately the behavior of the consumer in the marketplace destroys, maintains or creates jobs. But, since we are embroiled in a global marketplace, we need to think of consumers and the jobs they create on a global scale. Much that is consumed in the US is mined, farmed or manufactured elsewhere and a portion of what we take from the earth, grow and build here is consumed elsewhere. However, regardless of where something is made, it is marketed and transported locally. So increases in demand for even product manufactured in China, as is the case with most of what is sold in Wall Mart for example, creates sales clerk, administrative and transportation jobs. Though the “middle class” has been shrinking in the US it is growing dramatically in “third world” countries and their consumption will have a strong impact on our jobs. The nature of the impact will be determined by how we navigate through the dynamics we are in the midst of throughout the world. Unfortunately on the right there is a simplistic view pushing for less government and lauding unsupported “exceptionalism”. Progress in an ever-shrinking world is a complex undertaking and will not only require government involvement but a “nuanced” one at that.