Quote:
Originally Posted by Stormieweather
You need more customers in order to expand. Businesses don't just expand because they have extra money, they expand because demand is higher for their product/service (and they can't squeeze any more out of their current resources).
And that means more cash is needed in the consumer's pocket.
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Quote:
Originally Posted by Flint
I'm sure that is a valid variable here. I'm not an economist. But I do know that businesses want to grow and get bigger, and that it takes an investment in increasing capacity (buying a new truck, machine, or computer, for example) in order to get bigger. That takes money.
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Stormie is correct. The myth that the Republicans are pushing this election is that small businesses are the job creators. That's not true. Businesses are reactionary. They get busy and they hire more help. They get busy when the consumers start buying their product or service more. Consumers buy more when they have more money to spend, (or feel like they have more money to spend and are willing to charge it.)
Sure, businesses always want to grow and expand. But if they are in a mature field, that growth is always through taking market share from other companies. That does not create jobs. If company A has 20 employees and competitor B has 20 employees, and they both are selling widgets, then for company A to grow and expand to 30 employees, competitor B will have to lose customers and lay off 10 employees. Net job gain zero. In fact, to take market share, often a company does it through being more efficient and offering a product at a lower price. "More efficient" usually means fewer employees. So you actually end up with fewer jobs total.
The only way to get the entire pie to be larger is to get new customers who weren't buying widgets before. The only way to do that is to invent a new widget (like an iPhone) or make the widget so cheaply that not only do you take market share from competitors, you get customers who were sitting on the sidelines previously.
The most effective way to stimulate the economy is to get consumers to start spending.