June 15, 2013

ECONOMICS 1:

Don't Blame the Work Force (THE EDITORIAL BOARD, June 15, 2013, NY Times)

In a healthy economy, job openings are plentiful and unemployment is low.

This is the most obvious confusion in the current employment hysteria, the belief that the purpose of an economy is to create work.  

The reality is that the purpose is to create wealth.

Were the former true, it would make good economic sense to require companies to hire people right up until the point where they would tip into unprofitability.

Because the latter is true, it makes sense to encourage companies to maximize productivity and profitability by reducing the labor input required to create wealth.

We have a political problem--how to distribute the wealth the economy creates--not an economic one.

Posted by at June 15, 2013 6:26 PM
  

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