Legal Commentary

"Demand Is The Bottom Line"

By Big Tent Democrat

Demand is the bottom line. I'll hire more people when there is more demand for my product. - New Jersey small business owner

I spent some time yesterday with a small business owner in New Jersey and I asked him about the different tax incentive proposals being bandied about by the Obama Administration. His reaction? He'll take the the extra money but it won't spur him to hire workers or make capital investments. What will? He said "demand is the bottom line. When demand for my product goes up, then I'll increase capacity, by hiring or making capital investments."

This sentiment echoes the expressions of former Bush Treasury Secretary and Alcoa chairman Paul O'Neill ("I had a rule when I was in the private sector for 25 years, including 13 running Alcoa, and that is, don't hire people unless you have somebody demanding goods that you can't produce with the people you already have.") Robert Reich makes a similar point:

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

Failing to concentrate with laser like focus on the best demand stimulus initiatives has been the failure of the Obama Administration and Democrats from the beginning. These latest proposals are merely the sad last chapters before the political deluge of November.

Speaking for me only

Full post as published by TalkLeft on September 07, 2010 (boomark / email).