8 ms·

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 ro

by 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.
- brc 15y ago
  Well I'm with you, but would just like to add the intention should not necessarily be full employment but full production. We talk about jobs as the most important things, but in reality it is maximising production that is the most important thing. If every farm maximised production, then food becomes more plentiful. If every factory maxmises production, then goods become more plentiful. The fascination with GDP (as a monetary figure) and Jobs, to me, is looking at the wrong metrics. There is plenty of capital around. A lot more would come out from the shadows if it found productive uses. But trying to force capital out by lowering the price you can get on it (ie,lowering interest rates) is a bizarre way of going about things. The key has to be on increasing productivity. This includes not wasting human and monetary capital on pointless schemes (ie, make work schemes and losing investments). The rest will fall into place once this is done.
redwood 15y ago
Suppose for a moment, that putting extra people on staff will never again be more profitable than not hiring them at all. What then should society do? I'm totally open to the idea that the supposition above may be ludicrous, but would like to see how we will create the wealth you describe.
- fleitz 15y ago
  At that point we've likely reached a point of abundance and can use the non-human labour we're using to provide a nice life for everyone. At that point the major metrics of the economy switch from something akin to GNP to Gross National Happiness.
  - amikula 15y ago
    Actually the people who had the wealth to build the non-human labor force become the rulers of our society. Their corporations will become the new governments and campaign against one another for control of resources. What happens at that point is anyone's guess.
    - Kliment 15y ago
      This is a real danger. There are several ways to counter it. One is to make as much production technology as we can open source and ensure it is well spread. This is what the RepRap and Open Source Ecology projects are doing, and the progress has been tremendous over the past years. Publishing everything counters patent threats, GPL-like licenses prevent exploitation without contribution, self-replicating machines make the technologies both cheap and available. This is my favorite way of countering the threat. Other methods include government intervention, revolution of the (ex-)workers, consumer boycotts (off the grid communities) and benevolent corporates. None of them are as effective, and very few of them can be worked on in the short term.
    - redwood 15y ago
      I believe we're approaching this point. The least noticed big news of the year was Foxconn's announcement that it plans to replace its workers with robots in the next two years. The fact that robots have reached even the Chinese labor price means robots will always be preferred when manufacturing returns to the US. So how will we distribute the wealth? I suspect the masses will vote in a form of distribution and would rather see it some kind of force employment than a government handout.
pcowans 15y ago
I disagree - I'm not an economist, but certainly here in the UK there's a lot of talk about access to credit being a significant limiting factor. Hence the government's 'credit easing' program, which is aimed at lending directly to businesses where the banks won't: http://www.guardian.co.uk/politics/2011/oct/03/george-osborne-credit-easing-plan http://www.guardian.co.uk/politics/2011/oct/03/george-osborn...
- OstiaAntica 15y ago
  A lot of the growth of the last decade was driven by unsustainable private and public borrowing and spending. Most people in the political class are desperate to get the credit bubble-blowing machine running again, by having the state subsidize un-economic loans to un-creditworthy businesses and individuals.
  - pcowans 15y ago
    Sure, although I think in this case it might be the lesser of two evils. It would definitely be nice to see the private sector funding job creation, but if they're not going to do it it's probably worth getting the government involved.
randomdata 15y ago
The main reason businesses aren't hiring is that they're not convinced that putting extra people on staff will actually be profitable. I believe it is deeper than that. If we look to agriculture, there is a short expiration date on the job. If you don't get the crop off in a timely manner, you are quickly going to be out of business. I hear farmers constantly complaining how difficult it is to find good people, but they are left hiring just about anyone out of necessity. Manufacturing is similar. You have to keep the products going out the door to stay in business. As such, manufacturers also need to hire someone, anyone, to get the job done. Like the farmers, manufacturers will spend the time to make them better employees. However, in our technology based economy time does not matter. If you make a product and don't make any changes to it in several years, people will continue to buy your products anyway. You can afford to wait to hire who you feel is the very best, even if it takes years to find them. Once you are established, the only way you can lose revenue is if the competition does something significantly better; but they too are waiting on the best. That is the problem that I see. There is no need to hire poor employees. You can wait to hire the best of the best. If they are busy right now, you can hire them later.
- hugh3 15y ago
  What proportion of jobs in the United States are in programming or things analogous to programming? What proportion of jobs in the United States are in agriculture, manufacturing, or things analogous to agriculture and manufacturing? I think you may be suffering from short-sightedness, and assuming that the whole world looks a lot more like your corner of it than it does.
  - randomdata 15y ago
    It is not about absolute values, it is about trends. There's no question the tech sector is small, relatively speaking, but agriculture and manufacturing jobs are shrinking while technology-based jobs are growing. For every job lost in agriculture and manufacturing, there is a new job in the tech industry. However, unless you are highly skilled, nobody will be interested in you. That is the problem. Farmers desperately want skilled people too, but they will hire anyone if they absolutely have to, simply because the job has to be done. In tech, if you can't find that perfect programmer, it doesn't matter all that much if it takes an additional six months to start the product. Google claims they have approximately 2,000 open positions at all times. If those jobs had to be filled at all cost, they would have no trouble finding people. There are more than 2,000 unemployed people in the USA. The point is that they aren't really in need of filling those roles, it is more of a "nice to have" thing. They are waiting for great people. My corner is agriculture and technology, so I get to see the vast differences in how people are hired.
deleted 15y ago
[deleted]
invalidOrTaken 15y ago
A good question to ask is---do we want to create jobs? "Job" has a variety of meanings. It can mean a great opportunity, or it can mean devalued wage slavery. Usually it means filling a role as an economic input in the profit machine someone is constructing. The killer development that would create a bunch of jobs at a stroke would be a tool that lets companies profit by hiring uneducated people. But there are other options for helping the masses than jobs. On the cost reduction front, cheap home solar energy would be huge in terms of saving people from their utility bills. Optimized-for-small-garden strains of crops could play the same role with food. Also, there are some scenarios where something doesn't create jobs per se, but certainly allows people to make wealth. The rise of the OSS stack was one, and 3d printing might become another.
- prostoalex 15y ago
  http://www.zpub.com/notes/idle.html http://www.zpub.com/notes/idle.html
pitdesi 15y ago
Easier access to credit is a huge detriment to small businesses, in ways that we (startup-folks) don't think about... One example - the typical small business restaurant. It is a VERY different businesses than the startups that we create. You can't create a restaurant without any money, for example... You can bootstrap an online business by not paying yourself, but when you have to pay for a building and kitchen etc, things are much tougher. Programs like this that leverage your dollars effectively are pretty useful - there are lot of people out there who want to start small businesses or hire someone seasonally etc that are just in a cash crunch... You have to hire someone before you get paid for their efforts, and you can't offer them equity. What they're doing (in my understanding) is eliminating the default risk for lenders, so they are able to leverage the dollars 1 to 7. This is also common in the microfinance field. It makes a lot of sense. Also, SBUX is the best place I can think of to market this. I'm in line paying $5 for a coffee... can I give a dollar for small business? hell yeah. A question arises in my mind though, shouldn't I just pay $4 for a coffee at an actual small business? We made an infographic on small business lending... it isn't our best, but it does have some useful stats (TL;DR - credit is a big problem for small businesses and loans are really hard to get): http://feefighters.com/blog/ff_infographic/the-truth-about-small-business-lending/ http://feefighters.com/blog/ff_infographic/the-truth-about-s...
- kennyma 15y ago
  Good point about spending $4 at a small business instead. That will help keep existing businesses alive but it will not solve the capital problem to start a small business.
- wisty 15y ago
  Restaurants can be bootstrapped. A mobile vending unit costs ~20k. Add an extra 10k of permits, and basic inventory, and you could sell coffee somewhere near a transport hub. From there, you could add a few food items, build up savings, then lease a small restaurant. The problem is, regulators can be very unfriendly to mobile vendors.
  - Goladus 15y ago
    Restaurants can be bootstrapped for some limited values of "restaurant" and "bootstrap." You can also steer a car with your feet, but hands are a lot more effective.
9999 15y ago
Hold your horses. Tell us more about this rock throwing, window breaking, glass making job creation plan of yours. This has been the most viable job creation plan I've heard of to date.
- hugh3 15y ago
  I'd love to, but unfortunately I live in a glass house.
- tomjen3 15y ago
  His plan is good but it only creates a limited amount of jobs and it is not especially environmentally friendly. My plan will create at least an order of magnitude more jobs, jobs for those with no education, jobs for the illiterate, the literate etc. It is simple to. Nothing needs to be broken. All you have to do is to outlaw electricity, gasoline and diesel as well as any other method of generating power except by human or animals. It will easily end the current unemployment mess not to mention cut the CO2 emission to almost nothing, create a community spirit, end the surveillance programs (both the one run by the CIA and the one run by Facebook and Google) bring the troops home (although it will take a while as they will have to walk) put an end to money in politics reduce the income difference between the 1% and the rest and solve plenty of other problems as well.
  - Skillset 15y ago
    It would also solve obesity, because they'd all be human-powered. I actually imagine a future where we could basically have gigantic power generation stations stocked with complex exercise machines.
    - kennyma 15y ago
      The more I think about it, the more I like it :) genius!
- qdog 15y ago
  s/window/wealth holder's window/ It is often argued that the 'breaking windows' scenario is a fallacy because the capital redirected to fix the window would be used for something more productive, which is only true assuming a company or individual is utilizing this excess capital. So, you have to break windows where people are holding capital, ie: the owner of the window is wealthy. If you break a window at the local pizza joint that is barely breaking even, you probably get a negative return (unless the new window is somehow superior to the old window...). People who are wealthy or think they are going to be wealthy don't really like this approach, obviously, but unlike an individual who benefits from holding assets, the economy requires a constant, sometimes increasing, flow of economic activity (you get paid, you pay for goods and services, your money keep circulating, etc.).
Goladus 15y ago
> We need to stop talking about "job creation" and start talking about "wealth creation". It's more than wealth creation, though. People must also be paid fairly for the wealth created. Wealth creation is happening, the problem is that the rewards for it are all being skimmed away and those in the middle are being squeezed-- squeezed out of their homes, out of their cars, and out of their educations. The housing boom of the last decade resulted in a great deal of wealth creation. That wasn't the problem. The problem is who ultimately winds up owning that wealth and how much it's worth on the market. It's true you can't just wave your magic jobs wand and "create jobs," it's true that people gloss over the need to create wealth and eventually be profitable. That doesn't mean improving the number and quality of jobs (or work) available isn't an important focus.
- prostoalex 15y ago
  >>> Wealth creation is happening, the problem is that the rewards for it are all being skimmed away and those in the middle are being squeezed Those whose compensation is unfair usually run for another employer (that another employer sometimes being themselves). Money is simply a proxy for the value of the goods/services they produce for the society.
  - Goladus 15y ago
    > Those whose compensation is unfair usually run for another employer This doesn't happen efficiently, however. Moving upwards is risky and the consequences of a downward-adjustment (getting layed off) often include bankruptcy and financial ruin.
  - anon808 15y ago
    "Money is simply a proxy for the value of the goods/services they produce for the society." If that's true, explain drug money. I'm being serious. Money is a decent proxy, but not perfect. It's important to remember that. It's good at measuring quantity, not quality.
    - lupatus 15y ago
nostromo 15y ago
Your comment reminds me of my own personal frustration with our governance and current economy. I have a modest sum of money in various forms. The central bank in the US is basically said to me, "stop saving!" because interest rates are so low and inflation is likely to be high in the future -- there's no point. Saving is out. (You think we would have learned something...) So, let's look at possible investments. Real-estate? Maybe, but investment requirements for real-estate have gone up dramatically. In fact, I was recently told that if you're self-employed (aka creating jobs) for less than several years and looking for an investment property mortgage that you'll need to put down 50% to invest in property. So, I could find property to buy outright, but it seems that wouldn't being taking advantage of any real leverage. Stocks? Sure, I have some stocks, but I'm not going to put all of my eggs in that basket after seeing 15 years of market swings and no real growth. (Sorry John Bogle, you may be wrong after all.) So, I would like to put this money to work in some small way, but I have yet to see a way to actually do that (other than by starting a business, which is exactly what I did, but I'd like some diversity obviously). It makes you realize why more arcane investments like gold and bitcoin and startups are all very volatile, people are looking for something anything to invest in. Fixing this stalemate is hard, but the government needs to find a way if they want money to come out from under the mattress and become productive again.
- eru 15y ago
  > So, I could find property to buy outright, but it seems that wouldn't being taking advantage of any real leverage. Why are you looking for leverage? Isn't 50% quite a lot of leverage?
  - fraserharris 15y ago
    Its actually 100% leverage of his investment.
    - eru 15y ago
      Thanks for the correction! I didn't remember the exact definition.
  - 15y ago
AJ007 15y ago
Thomas Friedman had a column in the NYTimes about a week ago. While I did not agree with the specific, this quote was gold: "We cannot bail or tax-cut our way to prosperity. We can only, as Jobs understood, invent our way there." Measuring GDP, inflation, deflation, the unemployment rate, all of these numbers are not a reflection of quality of life. Prosperity is a quality of life issue which is solely improved (or destroyed) through technological advancement.
- achompas 15y ago
  If you're going to listen to a Friedman talk about economics, make it Milton. Quoting Thomas Friedman is an exercise in pop sociology and buzzword-dropping. Invention is not a necessary or sufficient condition for prosperity. You can arrive there via many paths (thriftiness or wise investment, service provision, etc.).
  - cjy 15y ago
    I don't like Thomas Friedman either. But, that is a good quote that I think Milton would agree with. He doesn't say that invention is a necessary condition for prosperity. He said it is a necessary condition for prosperity GROWTH.
    - achompas 15y ago
      I'm shocked that you inferred as much from his quote. He's notoriously vague (because he's not actually saying anything), and after re-reading the quote I'm not sure where you got the "growth" part from.
- SkyMarshal 15y ago
  This is directed at Thomas Friedman, not you... He is the most uncritical cheerleader blowhard I've just about ever read. He spent the early 2000s raving about how outsourcing America's wealth-creation capacity was a great thing, and now he's taking the lead in lamenting it. I don't know who feeds him his ideas, but he lacks experience, judgment, and wisdom to fully evaluate them himself, and is at best an unskilled popularizer of spurious memes. The few times he says something not totally sophomoric, it's almost certainly due to random chance alone. Broken clock is right twice a day. If you're going to listen to any one person on this issue, Andy Grove is the one: http://www.gsb.stanford.edu/news/bmag/sbsm1106/manufacturing.html http://www.gsb.stanford.edu/news/bmag/sbsm1106/manufacturing... http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm http://www.businessweek.com/magazine/content/10_28/b41860483... I wish I could vote for Grove for President. I just might write him in. /rant
anon808 15y ago
s/wealth/value
brc 15y ago
I agree with you totally. The focus should be on increasing wealth through more production of everything. Somehow we've ended up in a situation where everyone focuses on job creation at the expense of everything else. Right now most families need two parents working in order to provide. I think many would be happier with one less parent working if they could maintain the same standard of living. That would be possible if one of the parents doubled their productivity. Yes, it's a crude example but shows that focusing on jobs, and jobs only is looking at the wrong metric. Counting jobs is as foolish as counting lines of code developed rather than the output of the code. But because each job is attached to a person, we've all become blinkered to it, like a PHB counting lines of code and assuming progress is being made. Wealth creation is simply the process of creating a better life through a combination of hard work and technology. When you live better you're more wealthy. Unfortunately, just about every initiative I have seen from any government for the last 10 years has been about job creation, when wealth creation isn't even considered, or, if it is, in a distasteful manner, usually coupled with some reference to greed and profit. But the only way to create real jobs is to create wealth that people will willingly exchange their own labor for.
- nradov 15y ago
  That wouldn't help. People's expectations for standard of living would rise, and both parents would continue working just to keep up with the Joneses. Furthermore, in most families the main reason for needing dual incomes is to pay for housing. Increasing productivity does nothing for affordable housing. Real estate prices tend to rise right along with average incomes.
  - brc 15y ago
    Sorry, but you've missed my point. The one-parent-quitting description is to show that the same amount of output/production/work can happen with half the people if they are twice as productive. This is to show that increased productivity (more product, same amount of work) is more important than jobs. Increased productivity gives more of everything for everyone. We all know this to be true - if you spend all day napping in the sun, you get nothing achieved. If you spend all day working, you can get many things achieved.
6ren 15y ago
Define "wealth".

by hugh3 15y ago

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.
brc 15y ago
Well I'm with you, but would just like to add the intention should not necessarily be full employment but full production. We talk about jobs as the most important things, but in reality it is maximising production that is the most important thing. If every farm maximised production, then food becomes more plentiful. If every factory maxmises production, then goods become more plentiful. The fascination with GDP (as a monetary figure) and Jobs, to me, is looking at the wrong metrics. There is plenty of capital around. A lot more would come out from the shadows if it found productive uses. But trying to force capital out by lowering the price you can get on it (ie,lowering interest rates) is a bizarre way of going about things. The key has to be on increasing productivity. This includes not wasting human and monetary capital on pointless schemes (ie, make work schemes and losing investments). The rest will fall into place once this is done.

redwood 15y ago

Suppose for a moment, that putting extra people on staff will never again be more profitable than not hiring them at all. What then should society do? I'm totally open to the idea that the supposition above may be ludicrous, but would like to see how we will create the wealth you describe.

fleitz 15y ago
At that point we've likely reached a point of abundance and can use the non-human labour we're using to provide a nice life for everyone. At that point the major metrics of the economy switch from something akin to GNP to Gross National Happiness.
- amikula 15y ago
  Actually the people who had the wealth to build the non-human labor force become the rulers of our society. Their corporations will become the new governments and campaign against one another for control of resources. What happens at that point is anyone's guess.
  - Kliment 15y ago
    This is a real danger. There are several ways to counter it. One is to make as much production technology as we can open source and ensure it is well spread. This is what the RepRap and Open Source Ecology projects are doing, and the progress has been tremendous over the past years. Publishing everything counters patent threats, GPL-like licenses prevent exploitation without contribution, self-replicating machines make the technologies both cheap and available. This is my favorite way of countering the threat. Other methods include government intervention, revolution of the (ex-)workers, consumer boycotts (off the grid communities) and benevolent corporates. None of them are as effective, and very few of them can be worked on in the short term.
  - redwood 15y ago
    I believe we're approaching this point. The least noticed big news of the year was Foxconn's announcement that it plans to replace its workers with robots in the next two years. The fact that robots have reached even the Chinese labor price means robots will always be preferred when manufacturing returns to the US. So how will we distribute the wealth? I suspect the masses will vote in a form of distribution and would rather see it some kind of force employment than a government handout.

pcowans 15y ago

I disagree - I'm not an economist, but certainly here in the UK there's a lot of talk about access to credit being a significant limiting factor. Hence the government's 'credit easing' program, which is aimed at lending directly to businesses where the banks won't: http://www.guardian.co.uk/politics/2011/oct/03/george-osborne-credit-easing-plan http://www.guardian.co.uk/politics/2011/oct/03/george-osborn...

OstiaAntica 15y ago
A lot of the growth of the last decade was driven by unsustainable private and public borrowing and spending. Most people in the political class are desperate to get the credit bubble-blowing machine running again, by having the state subsidize un-economic loans to un-creditworthy businesses and individuals.
- pcowans 15y ago
  Sure, although I think in this case it might be the lesser of two evils. It would definitely be nice to see the private sector funding job creation, but if they're not going to do it it's probably worth getting the government involved.

randomdata 15y ago

The main reason businesses aren't hiring is that they're not convinced that putting extra people on staff will actually be profitable. I believe it is deeper than that. If we look to agriculture, there is a short expiration date on the job. If you don't get the crop off in a timely manner, you are quickly going to be out of business. I hear farmers constantly complaining how difficult it is to find good people, but they are left hiring just about anyone out of necessity. Manufacturing is similar. You have to keep the products going out the door to stay in business. As such, manufacturers also need to hire someone, anyone, to get the job done. Like the farmers, manufacturers will spend the time to make them better employees. However, in our technology based economy time does not matter. If you make a product and don't make any changes to it in several years, people will continue to buy your products anyway. You can afford to wait to hire who you feel is the very best, even if it takes years to find them. Once you are established, the only way you can lose revenue is if the competition does something significantly better; but they too are waiting on the best. That is the problem that I see. There is no need to hire poor employees. You can wait to hire the best of the best. If they are busy right now, you can hire them later.

hugh3 15y ago
What proportion of jobs in the United States are in programming or things analogous to programming? What proportion of jobs in the United States are in agriculture, manufacturing, or things analogous to agriculture and manufacturing? I think you may be suffering from short-sightedness, and assuming that the whole world looks a lot more like your corner of it than it does.
- randomdata 15y ago
  It is not about absolute values, it is about trends. There's no question the tech sector is small, relatively speaking, but agriculture and manufacturing jobs are shrinking while technology-based jobs are growing. For every job lost in agriculture and manufacturing, there is a new job in the tech industry. However, unless you are highly skilled, nobody will be interested in you. That is the problem. Farmers desperately want skilled people too, but they will hire anyone if they absolutely have to, simply because the job has to be done. In tech, if you can't find that perfect programmer, it doesn't matter all that much if it takes an additional six months to start the product. Google claims they have approximately 2,000 open positions at all times. If those jobs had to be filled at all cost, they would have no trouble finding people. There are more than 2,000 unemployed people in the USA. The point is that they aren't really in need of filling those roles, it is more of a "nice to have" thing. They are waiting for great people. My corner is agriculture and technology, so I get to see the vast differences in how people are hired.

deleted 15y ago

[deleted]

invalidOrTaken 15y ago

A good question to ask is---do we want to create jobs? "Job" has a variety of meanings. It can mean a great opportunity, or it can mean devalued wage slavery. Usually it means filling a role as an economic input in the profit machine someone is constructing. The killer development that would create a bunch of jobs at a stroke would be a tool that lets companies profit by hiring uneducated people. But there are other options for helping the masses than jobs. On the cost reduction front, cheap home solar energy would be huge in terms of saving people from their utility bills. Optimized-for-small-garden strains of crops could play the same role with food. Also, there are some scenarios where something doesn't create jobs per se, but certainly allows people to make wealth. The rise of the OSS stack was one, and 3d printing might become another.

prostoalex 15y ago
http://www.zpub.com/notes/idle.html http://www.zpub.com/notes/idle.html

pitdesi 15y ago

Easier access to credit is a huge detriment to small businesses, in ways that we (startup-folks) don't think about... One example - the typical small business restaurant. It is a VERY different businesses than the startups that we create. You can't create a restaurant without any money, for example... You can bootstrap an online business by not paying yourself, but when you have to pay for a building and kitchen etc, things are much tougher. Programs like this that leverage your dollars effectively are pretty useful - there are lot of people out there who want to start small businesses or hire someone seasonally etc that are just in a cash crunch... You have to hire someone before you get paid for their efforts, and you can't offer them equity. What they're doing (in my understanding) is eliminating the default risk for lenders, so they are able to leverage the dollars 1 to 7. This is also common in the microfinance field. It makes a lot of sense. Also, SBUX is the best place I can think of to market this. I'm in line paying $5 for a coffee... can I give a dollar for small business? hell yeah. A question arises in my mind though, shouldn't I just pay $4 for a coffee at an actual small business? We made an infographic on small business lending... it isn't our best, but it does have some useful stats (TL;DR - credit is a big problem for small businesses and loans are really hard to get): http://feefighters.com/blog/ff_infographic/the-truth-about-small-business-lending/ http://feefighters.com/blog/ff_infographic/the-truth-about-s...

kennyma 15y ago
Good point about spending $4 at a small business instead. That will help keep existing businesses alive but it will not solve the capital problem to start a small business.
wisty 15y ago
Restaurants can be bootstrapped. A mobile vending unit costs ~20k. Add an extra 10k of permits, and basic inventory, and you could sell coffee somewhere near a transport hub. From there, you could add a few food items, build up savings, then lease a small restaurant. The problem is, regulators can be very unfriendly to mobile vendors.
- Goladus 15y ago
  Restaurants can be bootstrapped for some limited values of "restaurant" and "bootstrap." You can also steer a car with your feet, but hands are a lot more effective.

9999 15y ago

Hold your horses. Tell us more about this rock throwing, window breaking, glass making job creation plan of yours. This has been the most viable job creation plan I've heard of to date.

hugh3 15y ago
I'd love to, but unfortunately I live in a glass house.
tomjen3 15y ago
His plan is good but it only creates a limited amount of jobs and it is not especially environmentally friendly. My plan will create at least an order of magnitude more jobs, jobs for those with no education, jobs for the illiterate, the literate etc. It is simple to. Nothing needs to be broken. All you have to do is to outlaw electricity, gasoline and diesel as well as any other method of generating power except by human or animals. It will easily end the current unemployment mess not to mention cut the CO2 emission to almost nothing, create a community spirit, end the surveillance programs (both the one run by the CIA and the one run by Facebook and Google) bring the troops home (although it will take a while as they will have to walk) put an end to money in politics reduce the income difference between the 1% and the rest and solve plenty of other problems as well.
- Skillset 15y ago
  It would also solve obesity, because they'd all be human-powered. I actually imagine a future where we could basically have gigantic power generation stations stocked with complex exercise machines.
  - kennyma 15y ago
    The more I think about it, the more I like it :) genius!
qdog 15y ago
s/window/wealth holder's window/ It is often argued that the 'breaking windows' scenario is a fallacy because the capital redirected to fix the window would be used for something more productive, which is only true assuming a company or individual is utilizing this excess capital. So, you have to break windows where people are holding capital, ie: the owner of the window is wealthy. If you break a window at the local pizza joint that is barely breaking even, you probably get a negative return (unless the new window is somehow superior to the old window...). People who are wealthy or think they are going to be wealthy don't really like this approach, obviously, but unlike an individual who benefits from holding assets, the economy requires a constant, sometimes increasing, flow of economic activity (you get paid, you pay for goods and services, your money keep circulating, etc.).

Goladus 15y ago

> We need to stop talking about "job creation" and start talking about "wealth creation". It's more than wealth creation, though. People must also be paid fairly for the wealth created. Wealth creation is happening, the problem is that the rewards for it are all being skimmed away and those in the middle are being squeezed-- squeezed out of their homes, out of their cars, and out of their educations. The housing boom of the last decade resulted in a great deal of wealth creation. That wasn't the problem. The problem is who ultimately winds up owning that wealth and how much it's worth on the market. It's true you can't just wave your magic jobs wand and "create jobs," it's true that people gloss over the need to create wealth and eventually be profitable. That doesn't mean improving the number and quality of jobs (or work) available isn't an important focus.

prostoalex 15y ago
>>> Wealth creation is happening, the problem is that the rewards for it are all being skimmed away and those in the middle are being squeezed Those whose compensation is unfair usually run for another employer (that another employer sometimes being themselves). Money is simply a proxy for the value of the goods/services they produce for the society.
- Goladus 15y ago
  > Those whose compensation is unfair usually run for another employer This doesn't happen efficiently, however. Moving upwards is risky and the consequences of a downward-adjustment (getting layed off) often include bankruptcy and financial ruin.
- anon808 15y ago
  "Money is simply a proxy for the value of the goods/services they produce for the society." If that's true, explain drug money. I'm being serious. Money is a decent proxy, but not perfect. It's important to remember that. It's good at measuring quantity, not quality.
  - lupatus 15y ago

nostromo 15y ago

Your comment reminds me of my own personal frustration with our governance and current economy. I have a modest sum of money in various forms. The central bank in the US is basically said to me, "stop saving!" because interest rates are so low and inflation is likely to be high in the future -- there's no point. Saving is out. (You think we would have learned something...) So, let's look at possible investments. Real-estate? Maybe, but investment requirements for real-estate have gone up dramatically. In fact, I was recently told that if you're self-employed (aka creating jobs) for less than several years and looking for an investment property mortgage that you'll need to put down 50% to invest in property. So, I could find property to buy outright, but it seems that wouldn't being taking advantage of any real leverage. Stocks? Sure, I have some stocks, but I'm not going to put all of my eggs in that basket after seeing 15 years of market swings and no real growth. (Sorry John Bogle, you may be wrong after all.) So, I would like to put this money to work in some small way, but I have yet to see a way to actually do that (other than by starting a business, which is exactly what I did, but I'd like some diversity obviously). It makes you realize why more arcane investments like gold and bitcoin and startups are all very volatile, people are looking for something anything to invest in. Fixing this stalemate is hard, but the government needs to find a way if they want money to come out from under the mattress and become productive again.

eru 15y ago
> So, I could find property to buy outright, but it seems that wouldn't being taking advantage of any real leverage. Why are you looking for leverage? Isn't 50% quite a lot of leverage?
- fraserharris 15y ago
  Its actually 100% leverage of his investment.
  - eru 15y ago
    Thanks for the correction! I didn't remember the exact definition.
- 15y ago

AJ007 15y ago

Thomas Friedman had a column in the NYTimes about a week ago. While I did not agree with the specific, this quote was gold: "We cannot bail or tax-cut our way to prosperity. We can only, as Jobs understood, invent our way there." Measuring GDP, inflation, deflation, the unemployment rate, all of these numbers are not a reflection of quality of life. Prosperity is a quality of life issue which is solely improved (or destroyed) through technological advancement.

achompas 15y ago
If you're going to listen to a Friedman talk about economics, make it Milton. Quoting Thomas Friedman is an exercise in pop sociology and buzzword-dropping. Invention is not a necessary or sufficient condition for prosperity. You can arrive there via many paths (thriftiness or wise investment, service provision, etc.).
- cjy 15y ago
  I don't like Thomas Friedman either. But, that is a good quote that I think Milton would agree with. He doesn't say that invention is a necessary condition for prosperity. He said it is a necessary condition for prosperity GROWTH.
  - achompas 15y ago
    I'm shocked that you inferred as much from his quote. He's notoriously vague (because he's not actually saying anything), and after re-reading the quote I'm not sure where you got the "growth" part from.
SkyMarshal 15y ago
This is directed at Thomas Friedman, not you... He is the most uncritical cheerleader blowhard I've just about ever read. He spent the early 2000s raving about how outsourcing America's wealth-creation capacity was a great thing, and now he's taking the lead in lamenting it. I don't know who feeds him his ideas, but he lacks experience, judgment, and wisdom to fully evaluate them himself, and is at best an unskilled popularizer of spurious memes. The few times he says something not totally sophomoric, it's almost certainly due to random chance alone. Broken clock is right twice a day. If you're going to listen to any one person on this issue, Andy Grove is the one: http://www.gsb.stanford.edu/news/bmag/sbsm1106/manufacturing.html http://www.gsb.stanford.edu/news/bmag/sbsm1106/manufacturing... http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm http://www.businessweek.com/magazine/content/10_28/b41860483... I wish I could vote for Grove for President. I just might write him in. /rant

anon808 15y ago

s/wealth/value

brc 15y ago

I agree with you totally. The focus should be on increasing wealth through more production of everything. Somehow we've ended up in a situation where everyone focuses on job creation at the expense of everything else. Right now most families need two parents working in order to provide. I think many would be happier with one less parent working if they could maintain the same standard of living. That would be possible if one of the parents doubled their productivity. Yes, it's a crude example but shows that focusing on jobs, and jobs only is looking at the wrong metric. Counting jobs is as foolish as counting lines of code developed rather than the output of the code. But because each job is attached to a person, we've all become blinkered to it, like a PHB counting lines of code and assuming progress is being made. Wealth creation is simply the process of creating a better life through a combination of hard work and technology. When you live better you're more wealthy. Unfortunately, just about every initiative I have seen from any government for the last 10 years has been about job creation, when wealth creation isn't even considered, or, if it is, in a distasteful manner, usually coupled with some reference to greed and profit. But the only way to create real jobs is to create wealth that people will willingly exchange their own labor for.

nradov 15y ago
That wouldn't help. People's expectations for standard of living would rise, and both parents would continue working just to keep up with the Joneses. Furthermore, in most families the main reason for needing dual incomes is to pay for housing. Increasing productivity does nothing for affordable housing. Real estate prices tend to rise right along with average incomes.
- brc 15y ago
  Sorry, but you've missed my point. The one-parent-quitting description is to show that the same amount of output/production/work can happen with half the people if they are twice as productive. This is to show that increased productivity (more product, same amount of work) is more important than jobs. Increased productivity gives more of everything for everyone. We all know this to be true - if you spend all day napping in the sun, you get nothing achieved. If you spend all day working, you can get many things achieved.

6ren 15y ago

Define "wealth".