American Elephants

The Business of Businesses is to Create Value by The Elephant's Child

Back in 2011, a Rasmussen survey taken on August 20 and 21st found that 64 percent of Americans actually believe that the most basic goal of businesses is “to create jobs for the overall economy.”  Only 25 percent of respondents understood that “the primary objective of a business is to create value for the shareholders.” In other words, to make a profit. The socialists among us have so demonized the word “profit” without any understanding, that people get confused.

We have a lot of people in this country currently unable to find a job, and a lot who are working at jobs for which they are overqualified. So jobs are a big concern. Jobs, however, are not created out of thin air, or wishful thinking, and businesses are not charities.

Business begins with an idea. Someone thinks he can make money with his idea. Unless he is independently wealthy, he must raise money to start. He has to sell his idea to people who will believe that his idea will create value. Those people will become shareholders, giving our idea man enough money to get a start, and he in turn, gives them shares or rights to future value.

With that financial backing he can hire people to do the jobs necessary to create the value promised to shareholders and continue to create value so they will continue to support him.  Investors will stick around only so long buoyed by hope for future profits. They expect to get their money back, with some more value thrown in to reward them for risking their money.

“Profit” is not a dirty word.  People have long been confused by the political left— academics and media people who simply do not understand the profit motive. A successful idea, well-implemented, can create many jobs, not only in their own offices, but in all the companies that supply a business: raw materials, shipping containers, computers, equipment, janitorial services, transportation, and so on; and the same increase happens in each of the suppliers’ businesses.  Free enterprise at work.

But a free market economy is always changing, growing, and there is ‘creative destruction’ too. Here are a couple of examples that will clarify it all. Though each short video could prompt another few essays.

The MSRP for a Tesla Model S — $106,200. Tax and license extra. But the EPA: 101 city/102 hwy (MPGe)

The Record of the First Four Years: by The Elephant's Child
November 8, 2013, 6:08 pm
Filed under: Capitalism, Democrat Corruption, Economy, Progressivism | Tags: , ,


In the first four years of the Obama administration, the real median income of American households dropped by $2,627. The number of people in poverty increased by approximately 6,667,000 according to data the Census Bureau released today.

The number of people now officially in poverty is now a record 46,496,000, or twice the population of Syria — depending on how many have been killed recently.

The poverty threshold depends on the size of the family. A single person living by themselves was considered in poverty if they earned less than $14,937. A family of two was in poverty if they earned less than $14,937, and a family of three met the threshold at $18,284, a family of four at $23,492 and so on.

The real unemployment rate (the U-6 unemployment rate) is a broader measure of the unemployed plus all persons marginally attached to the labor force plus the total employed part-time for economic reasons. The U-6 rate is a fuller picture of people who are willing and able to work, but cannot find a job.

The U-6 rate was 14.5% in January 2009 and rose to a high of 17.1% in October November and December 2009 and through April 2010. The rate did not fall below 14% until March 2013 when it hit 13.8% where it is today.

To fix everything Obama recommends a pathway to citizenship for America’s illegal aliens. Not sure how that works. Just changing the subject?

ADDENDUM: The latest GDP report shows that Obama’s policies continue to weigh down the economy. The recovery from the Obama Recession is now 51 months old and the weakest since the Great Depression. Consumer and business spending have slowed and the recovery is $1.3 trillion below average. Had job growth been merely average there would be 7.3 million more people with jobs — or 64% of those looking for work would be employed. It was, of course —Bush’s fault, and when that didn’t work, insufficient stimulus, “head winds,” the Arab Spring, and problems in Spain, Italy and Greece. Now it’s the government shutdown. His own economic policies are never mentioned.

Milton Friedman Takes On the Minimum Wage by The Elephant's Child

The do-gooders believe that by passing a law saying that nobody shall get less than $9 per hour (adjusted for today) or whatever the minimum wage is, you are helping poor people who need the money. You are doing nothing of the kind. What you are doing is to assure, that people whose skills, are not sufficient to justify that kind of a wage will be unemployed.

The minimum wage law is most properly described as a law saying that employers must discriminate against people who have low skills. That’s what the law says. The law says that here’s a man who has a skill that would justify a wage of $5 or $6 per hour (adjusted for today), but you may not employ him, it’s illegal, because if you employ him you must pay him $9 per hour. So what’s the result? To employ him at $9 per hour is to engage in charity. There’s nothing wrong with charity. But most employers are not in the position to engage in that kind of charity. Thus, the consequences of minimum wage laws have been almost wholly bad. We have increased unemployment and increased poverty.

Moreover, the effects have been concentrated on the groups that the do-gooders would most like to help. The people who have been hurt most by the minimum wage laws are the blacks. I have often said that the most anti-black law on the books of this land is the minimum wage law.

There is absolutely no positive objective achieved by the minimum wage law. Its real purpose is to reduce competition for the trade unions and make it easier for them to maintain the higher wages of their privileged members.

The Facts Are Clear. by The Elephant's Child

Obama, Can You Spare a Dime? by The Elephant's Child

Vanderleun found an overlooked video from 2009, It packs a lot more punch today.

Obamanomics 101: Understanding How the Obama Economy Works by The Elephant's Child

The Hope and The Change — The Official Movie Trailer by The Elephant's Child
September 3, 2012, 6:53 am
Filed under: Capitalism, Economy, Politics | Tags: , ,


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