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Do Businesses Create Jobs?

October 16th, 2008

At Mises.org, Thedo inquires about how one of Obama’s tax proposals will create jobs:

This is my primary question about Barack Obama’s proposed tax policy, which involves tax credits for businesses that create jobs. How do they do that? Do they just hire more people and receive a check?

Strictly speaking, a business doesn’t really “create” jobs, at least, not any moreso than the government. A business, the firm/company/organization/co-operative/corporation, is simply a place where the production of goods and/or services happens. Businesses allocate and combine scarce economic goods, transforming them in to products that consumers want to purchase.

With that in mind, I think Thedo is making some syntactical errors. I would be very surprised to learn that Obama’s policy is going to give money to businesses after those businesses demonstrate they’ve “created” more jobs. What is more likely, is the generally accepted idea that tax cuts will stimulate businesses, that is, by reducing a businesses tax burden, policy may cause businesses to add more jobs.

no third solution

Blogging about liberty, anarchy, economics and politics