TJP

Pundits and politicians argue that businesses are sitting on piles of cash and therefore should hire unemployed resources. This argument, however, demonstrate their lack of business knowledge; hiring additional labor depends on expected returns.

Thus, when the economic outlook is poor, businesses cannot justify labor increases. Each additional unit of labor involves additional costs to the enterprise. Therefore, for the enterprise to justify hiring an additional unit of labor, the added output from the extra unit of labor must exceed its cost, otherwise the enterprise would not benefit from the added labor.

However, when consumers’ incomes are insufficient to purchase all the productive capacity within the economy, even if the added unit of labor could produce output in excess of its cost, it would not be hired. Since, the enterprise would not be able to sell the additional output to recoup the cost of the added unit of labor.

The problem, therefore, is not lack hiring by business sitting on piles of cash. Lack of hiring opportunities is a symptom of the problem. The real problem is lack of consumer income.

Lack of income was also a banking problem. However, their problem disappeared when the government used taxpayers’ funds to supply them with income. Had the government used those funds to supply citizens with income for mortgage restoration, real estate values would have remained stable. And, the wealth embodied in the residential asset would be available for generating effective consumer demand.

Effective demand would create a positive business outlook. And, the excess cash that businesses possess would be used to add labor and capital to the enterprise, reducing unemployment.

Thus, if the influx of government cash was funnel to consumers instead of bankers, the health of the economy would have rapidly improved.

Therefore, the distributors of taxpayers’ funds were either not concerned with the economy as a whole or were incompetent. However, judging from who benefited from the bailout, it is safe to conclude that they were not incompetent; they were merely concerned with restoring the mega income of their friends on Wall Street.

For the midterm election, both parties want the votes of the people they shafted. And, in a dual political system, the people’s choices are precarious.

So, why do Americans accept oligarchy as a political system? When they intuitively know that a competitive political system is more cost effective and more accountable to voters.

Let’s use the blogosphere to bring real change to the political system; through the blogosphere we can select third party writing candidates that are concerned with Main Street voters.

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