The president spoke to a joint session last night about growing jobs in the U.S. by giving incentives to employers (tax breaks) to stimulate hiring new employees, I listened to the speech and have questions.
Question: Why would some one hire new employees if there is no market for his product/service in the current market?
Answer: Because it will save the employer money with tax breaks and put people to work.
This is the same philosophy of spending money to make money or this is on sale at 50 percent off. If there is no market you are only spending money. The only reason to hire more employees is demand. When the fishing industry hires someone full time it is for a specific demand they don’t hire staff to run their plant forever, only while there is a demand. Buying into hiring employees because you’re saving money is like buying something on sale because it is sold below market price, you have no use for the product but it is “on sale”so look at the money you will save if you buy it. You now have a product that you can’t use but you did get to spend the money. The hole gets deeper if you buy more than you need because the money is still gone. It reminds me of the tax preparer who said don’t worry that money spent is tax deductible, the money is still gone.
Without demand there is no market. You can not produce a product or service on the “Field of Dreams” philosophy of build it and they will come, that works in the movies and makes you feel good, so now you feel good and your broke. Feeling good does not last. Having a demand for what you do does last. There is no reason to hire more employees unless you can not keep up with demand with the number employed, without overtime, for the current demand for a given product or service.