I'm not an economist, but I do have 6 hours of graduate economics and thus know one thing. Giving corporations tax cuts will not induce hiring, it won't create jobs. And it probably won't save them either. Companies scale to demand. This is immutable, regardless of what John McCain says.What I don't understand is why Obama is having such a hard time pointing this out (hint: It must be that JD thing.) An elementary walk through the basics of trade and commerce would drive the point home to all those fooled into thinking giving Fortune 500's hundreds of millions of tax breaks will stem job losses or increase hiring. I imagine that walk as such:
1. Man open shop.
2. People buy stuff from man.
3. Man make money!
4. More people buy more stuff from man.
5. Man make more money! Need help.
6. Hire 3 neighbors. Pay with money he make.
7. Neighbors Happy : )
8. But wait. Many people now lose job, no buy much :(
9. Man no need much help. Fire 2 neighbors.
10. People lose more jobs. People scared world end. No buy nothing.
11. Man make very little money. Man scared too :O Man fire last neighbor.
12. King and Court tell man he no pay taxes this year.
13. Man genuflect. But Man no hire. And Man no spend.
14. Man save. Man unsure. Man know not what tomorrow....
This is exactly what will happen writ large when 50% of the stimulus is enacted as tax cuts. Man no spend. In general people don't act when they're scared they contra act or contract. In other words they shrink. Don't believe me? Look in the mirror and you'll see there's a 95% chance I'm right.
Returning to the example, imgaine if man did know what tomorrow 'brung'. What if the King put in advance orders for 18 consecutive months of the Man's stuff? Is the man going to hire his neighbors or leave the King orders unfilled and his gold on the table?
