8 ms·

We Can All Become Job Creators

136 points by kennyma 15y ago

jen123 15y ago
I've seen some small businesses go under because they haven't been paid on time. They borrow capital to pay their employees until their customer gets around to paying them...This especially occurs if the customer is big and the business that is servicing them is small.
- jroseattle 15y ago
  Ditto. Saw this happen with a small local company that was given prime placement in WalMart -- and had to up their production by about 10000%. It wiped them out.
  - rhizome 15y ago
    Google "monopsony."
redwood 15y ago
Interesting, glad to see, at the very least, a bit of patriotism returning to the idea of jobs. In big companies the push to outsource is strong and political correctness prevents much dissent. Would still like to see a government regulation help as well: e.g. perhaps companies with more employees per profit would have a tax incentive and companies with fewer employees per profit would have a penalty. This way you essentially pass on 'unemployment' payments to companies rather than giving handouts from the government. Presumably companies would thus at least try to use the labor they were being required to hire. I know this sounds a bit like central planning, but doggonit' as we approach an era where we can survive with few in work due to machine help, we may need to regulate in a form of wealth redistribution. Quite frankly I'd rather see it done through companies than through the government directly. Of course the fact that I don't think the government today can manage a new deal type program is probably also a sign that the government won't be able to pass anything like this to begin with.
- redthrowaway 15y ago
  >perhaps companies with more employees per profit would have a tax incentive and companies with fewer employees per profit would have a penalty. That would be terrible. You'd be penalizing the Googles and Apples of the world, who create good jobs, and rewarding the Walmarts, who create shitty ones.
  - deleted 15y ago
    [deleted]
  - OstiaAntica 15y ago
    Agreed. Our friend is afraid of a problem that has never existed in history. A society that is increasing in productivity and wealth just creates new types of employment opportunities, not unemployment.
- OstiaAntica 15y ago
  Well, currently the government punishes companies that hire employees-- all sorts of payroll, worker's comp, and unemployment taxes, and also workplace legal liability that is extreme in the U.S. To the degree there is already a lot of central planning in U.S. labor markets, the government actively works against employment.
  - prostoalex 15y ago
    In Denmark, they tax fatty foods to discourage them. In the States, we tax payroll.
    - tomjen3 15y ago
      Thats a nice saying and I hate to ruin it but believe me most people in Denmark knows that the tax on fatty foods is just an excuse to bring in more money to the government. I mean are you really going to buy less meat because it went up 5%?
      - 15y ago
hugh3 15y ago
We need to stop talking about "job creation" and start talking about "wealth creation". It's easy to create jobs -- e.g. I can go round breaking windows with rocks and create jobs for glaziers. But creating jobs that create wealth -- that is, to create an opportunity for someone else to join their labour with my capital in order to build something that someone wishes to pay for, thus enriching all three of us... well, that's trickier. For existing small businesses, though, I'm wondering to what extent easier access to credit is really the answer. Are there that many small businesses out there right now saying "ohhh, we could be making so much more money if we hired someone, but we need to borrow money in order to hire them"? Some, surely, but many? The main reason businesses aren't hiring is that they're not convinced that putting extra people on staff will actually be profitable.
- hvs 15y ago
  I generally feel (and this is generally due to my Austrian economic leanings) that talking about easier access to capital (through artificially lowering interest rates) is confusing the symptoms with the disease. We need to build up the capital in this country through saving and investment in companies, but that is not accomplished by just wishing it (through economic manipulation). We are in the midst of a massive hangover and drinking more won't fix that, it'll just make us worse alcoholics. erm.. end rant
  - ddw 15y ago
    Uh, doesn't this program facilitate investment in companies?
    - hvs 15y ago
      Yes. I'm not speaking against this program, I was simply addressing the point made by hugh3. The larger problem is that we don't just need "investment" we need to avoid "malinvestment." But with economic manipulation, the market doesn't get the right signals for where capital should go. That said, I'm all for attempts to invest as best we can in this environment, and I'm in favor of this program.
  - 15y ago
chadmalik 15y ago
This is great. That said, its time to cut the crap. The US government has all time low rates on long term treasuries. There's plenty of stuff that needs doing. There's an army of unemployed. And most importantly, there's really no profitable investment opportunities in a lot of the country due to negative real interest rates and flat consumer demand. Business just isn't capable of digging us out of this ditch. Its time to stop genuflecting to the Randroids. Government is a part of the economy. Without government we wouldn't have things like, oh, let me think...THE INTERNET. This idea that the government can't do anything to fix this situation is just insane. Its time for a serious New New Deal program that puts people to work doing stuff. Obama is clearly a complete coward of a politician. The Republican party is off the deep end. People need to DEMAND serious fiscal stimulus that creates jobs paid by the government fixing things, teaching, researching, building infrastructure, etc. There's plenty of buildings, parks, etc. still standing that were built during the New Deal in the 30s. We need another similar effort. Now.
deleted 15y ago
[deleted]
deleted 15y ago
[deleted]
jallmann 15y ago
Correct me if I'm wrong, but this seems like a way to tug at people's heartstrings for free capital. If interest goes back to the original investors (donors), surely Starbucks is not going to track down everyone who contributed a dollar for their $1.05 back. Someone is going to profit handsomely from this, unless all the proceeds are reinvested into other loans.
- rhubarbquid 15y ago
  Yeah, I have the same concern. "Americans themselves would start lending to small businesses" and " Starbucks customers would be able to donate money to the effort when they bought their coffee." don't really agree with each other. Donating isn't lending. On the other hand, lending isn't a sure thing. We might be talking about people getting their $0 back from their $1 investment if the borrower defaults.
FD3SA 15y ago
Unfortunately, the issue is not so simple. The the labor market is under assault from every front. Illegal immigration and offshoring depress skilled labor wages, while at the same time robotics and software progress to automate as many skilled jobs as possible. Laborers turn to college degrees, which burden them with massive student loans, only to graduate with unimproved employment prospects due to the saturation of the market with higher ed degrees. Meanwhile, businesses have strong incentive to replace labor (human) with capital(machine), as the latter is far cheaper and does not require health insurance, benefits, or pension plans. This also helps businesses improve profit margins significantly. Thus, we have our scenario: corporate profitability increasing in tandem with structural unemployment. Consolidation of capital to a few major winners, and debt and unemployment for the losers. There are few ways out of this mess, and none of them can occur with "business as usual" policies.
- hugh3 15y ago
  Maybe, but let's be realistic. We're talking about 9% unemployment rather than a "full employment" value of 5%. The US economy is perfectly capable of finding productive work for another fifteen million people, just like it was three years ago, and eventually will be again. People have been predicting the end of work ever since the first mechanized... whatever. In the past 150 years, we've managed to mechanize the hell out of agriculture and manufacturing and we've hugely increased labour force participation by encouraging women to work. And yet, at every point along the road, unemployment rates always seem to stabilize at about 5% in good times, and shoot up to 10% in bad times (Great Depression excepted, but that was due to some zany government interference).
mfringel 15y ago
The term "Job Creator" is a clever-as-in-clever-bastard way of re-framing the discussion. "Job Creators" become their own privileged class of people who have the secret knowledge of how to Create Jobs. Also, the term "Creator" implies a certain deity-like status, as if only they have the power to create jobs from the void. I much prefer "employer."
- rhubarbquid 15y ago
  or "lender" in the context of this article.
dkrich 15y ago
I love the idea. Mainly because one of the biggest problems in our country (the US) right now is a complete breakdown in consumer confidence. People with money are sitting on it, afraid to spend or invest because they are afraid at any moment that the bottom could fall out. Getting people to invest in micro-amounts at a large scale could unlock a lot of credit for small businesses that could use it to grow. I don't necessarily think that it is going to turn the economy around, but thanks to Howard Schultz for making a concerted effort to do what he can to help.
- dkrich 15y ago
  I also think that it is an incredible marketing opportunity for Starbucks. For $5 million, they (rightly so) are viewed as patriots, and people (myself included) feel compelled to support them over their competitors.
teyc 15y ago
ReceivablesExchange (mixergy interview) solves the problem of cashflow by securitizing invoices, and having institutions bid for them. It is an interesting practice because it is less labour intensive than traditional factorization, and is better at spreading risk.

136 points by kennyma 15y ago

I've seen some small businesses go under because they haven't been paid on time. They borrow capital to pay their employees until their customer gets around to paying them...This especially occurs if the customer is big and the business that is servicing them is small.

jroseattle 15y ago
Ditto. Saw this happen with a small local company that was given prime placement in WalMart -- and had to up their production by about 10000%. It wiped them out.
- rhizome 15y ago
  Google "monopsony."

redwood 15y ago

Interesting, glad to see, at the very least, a bit of patriotism returning to the idea of jobs. In big companies the push to outsource is strong and political correctness prevents much dissent. Would still like to see a government regulation help as well: e.g. perhaps companies with more employees per profit would have a tax incentive and companies with fewer employees per profit would have a penalty. This way you essentially pass on 'unemployment' payments to companies rather than giving handouts from the government. Presumably companies would thus at least try to use the labor they were being required to hire. I know this sounds a bit like central planning, but doggonit' as we approach an era where we can survive with few in work due to machine help, we may need to regulate in a form of wealth redistribution. Quite frankly I'd rather see it done through companies than through the government directly. Of course the fact that I don't think the government today can manage a new deal type program is probably also a sign that the government won't be able to pass anything like this to begin with.

redthrowaway 15y ago
>perhaps companies with more employees per profit would have a tax incentive and companies with fewer employees per profit would have a penalty. That would be terrible. You'd be penalizing the Googles and Apples of the world, who create good jobs, and rewarding the Walmarts, who create shitty ones.
- deleted 15y ago
  [deleted]
- OstiaAntica 15y ago
  Agreed. Our friend is afraid of a problem that has never existed in history. A society that is increasing in productivity and wealth just creates new types of employment opportunities, not unemployment.
OstiaAntica 15y ago
Well, currently the government punishes companies that hire employees-- all sorts of payroll, worker's comp, and unemployment taxes, and also workplace legal liability that is extreme in the U.S. To the degree there is already a lot of central planning in U.S. labor markets, the government actively works against employment.
- prostoalex 15y ago
  In Denmark, they tax fatty foods to discourage them. In the States, we tax payroll.
  - tomjen3 15y ago
    Thats a nice saying and I hate to ruin it but believe me most people in Denmark knows that the tax on fatty foods is just an excuse to bring in more money to the government. I mean are you really going to buy less meat because it went up 5%?
    - 15y ago

hugh3 15y ago

We need to stop talking about "job creation" and start talking about "wealth creation". It's easy to create jobs -- e.g. I can go round breaking windows with rocks and create jobs for glaziers. But creating jobs that create wealth -- that is, to create an opportunity for someone else to join their labour with my capital in order to build something that someone wishes to pay for, thus enriching all three of us... well, that's trickier. For existing small businesses, though, I'm wondering to what extent easier access to credit is really the answer. Are there that many small businesses out there right now saying "ohhh, we could be making so much more money if we hired someone, but we need to borrow money in order to hire them"? Some, surely, but many? The main reason businesses aren't hiring is that they're not convinced that putting extra people on staff will actually be profitable.

hvs 15y ago
I generally feel (and this is generally due to my Austrian economic leanings) that talking about easier access to capital (through artificially lowering interest rates) is confusing the symptoms with the disease. We need to build up the capital in this country through saving and investment in companies, but that is not accomplished by just wishing it (through economic manipulation). We are in the midst of a massive hangover and drinking more won't fix that, it'll just make us worse alcoholics. erm.. end rant
- ddw 15y ago
  Uh, doesn't this program facilitate investment in companies?
  - hvs 15y ago
    Yes. I'm not speaking against this program, I was simply addressing the point made by hugh3. The larger problem is that we don't just need "investment" we need to avoid "malinvestment." But with economic manipulation, the market doesn't get the right signals for where capital should go. That said, I'm all for attempts to invest as best we can in this environment, and I'm in favor of this program.
- 15y ago

chadmalik 15y ago

This is great. That said, its time to cut the crap. The US government has all time low rates on long term treasuries. There's plenty of stuff that needs doing. There's an army of unemployed. And most importantly, there's really no profitable investment opportunities in a lot of the country due to negative real interest rates and flat consumer demand. Business just isn't capable of digging us out of this ditch. Its time to stop genuflecting to the Randroids. Government is a part of the economy. Without government we wouldn't have things like, oh, let me think...THE INTERNET. This idea that the government can't do anything to fix this situation is just insane. Its time for a serious New New Deal program that puts people to work doing stuff. Obama is clearly a complete coward of a politician. The Republican party is off the deep end. People need to DEMAND serious fiscal stimulus that creates jobs paid by the government fixing things, teaching, researching, building infrastructure, etc. There's plenty of buildings, parks, etc. still standing that were built during the New Deal in the 30s. We need another similar effort. Now.

deleted 15y ago

[deleted]

deleted 15y ago

[deleted]

jallmann 15y ago

Correct me if I'm wrong, but this seems like a way to tug at people's heartstrings for free capital. If interest goes back to the original investors (donors), surely Starbucks is not going to track down everyone who contributed a dollar for their $1.05 back. Someone is going to profit handsomely from this, unless all the proceeds are reinvested into other loans.

rhubarbquid 15y ago
Yeah, I have the same concern. "Americans themselves would start lending to small businesses" and " Starbucks customers would be able to donate money to the effort when they bought their coffee." don't really agree with each other. Donating isn't lending. On the other hand, lending isn't a sure thing. We might be talking about people getting their $0 back from their $1 investment if the borrower defaults.

FD3SA 15y ago

Unfortunately, the issue is not so simple. The the labor market is under assault from every front. Illegal immigration and offshoring depress skilled labor wages, while at the same time robotics and software progress to automate as many skilled jobs as possible. Laborers turn to college degrees, which burden them with massive student loans, only to graduate with unimproved employment prospects due to the saturation of the market with higher ed degrees. Meanwhile, businesses have strong incentive to replace labor (human) with capital(machine), as the latter is far cheaper and does not require health insurance, benefits, or pension plans. This also helps businesses improve profit margins significantly. Thus, we have our scenario: corporate profitability increasing in tandem with structural unemployment. Consolidation of capital to a few major winners, and debt and unemployment for the losers. There are few ways out of this mess, and none of them can occur with "business as usual" policies.

hugh3 15y ago
Maybe, but let's be realistic. We're talking about 9% unemployment rather than a "full employment" value of 5%. The US economy is perfectly capable of finding productive work for another fifteen million people, just like it was three years ago, and eventually will be again. People have been predicting the end of work ever since the first mechanized... whatever. In the past 150 years, we've managed to mechanize the hell out of agriculture and manufacturing and we've hugely increased labour force participation by encouraging women to work. And yet, at every point along the road, unemployment rates always seem to stabilize at about 5% in good times, and shoot up to 10% in bad times (Great Depression excepted, but that was due to some zany government interference).

mfringel 15y ago

The term "Job Creator" is a clever-as-in-clever-bastard way of re-framing the discussion. "Job Creators" become their own privileged class of people who have the secret knowledge of how to Create Jobs. Also, the term "Creator" implies a certain deity-like status, as if only they have the power to create jobs from the void. I much prefer "employer."

rhubarbquid 15y ago
or "lender" in the context of this article.

dkrich 15y ago

I love the idea. Mainly because one of the biggest problems in our country (the US) right now is a complete breakdown in consumer confidence. People with money are sitting on it, afraid to spend or invest because they are afraid at any moment that the bottom could fall out. Getting people to invest in micro-amounts at a large scale could unlock a lot of credit for small businesses that could use it to grow. I don't necessarily think that it is going to turn the economy around, but thanks to Howard Schultz for making a concerted effort to do what he can to help.

dkrich 15y ago
I also think that it is an incredible marketing opportunity for Starbucks. For $5 million, they (rightly so) are viewed as patriots, and people (myself included) feel compelled to support them over their competitors.

teyc 15y ago

ReceivablesExchange (mixergy interview) solves the problem of cashflow by securitizing invoices, and having institutions bid for them. It is an interesting practice because it is less labour intensive than traditional factorization, and is better at spreading risk.