10/18/2012 03:20 pm ET Updated Dec 18, 2012

Government Doesn't Create Jobs, but Spreading the Wealth Does

There's a critical piece missing from the Democratic narrative. It's not just this year either, it's ever since progressive thinking began to dominate our government a hundred years ago. This year, that piece has variously been defined as fairness, an equal shot or a level playing field, inaccurately. What that narrative is, in fact, is how spreading the wealth creates jobs. As it is, half of the country seems to believe that spreading around the wealth creates jobs and the other half doesn't. But it is not an article of faith, it's observable, rational and economic reality.

Unfortunately, when you utter the word economics, people's eyes glaze over and they change the auditory channel. They'd rather listen to traffic sounds than whatever follows that word. Too bad. It's too bad because economics seems complicated, but it's not. Yes, you can get way off in the weeds of detail, but the principles are simple and it's not about math at all. It's about human behavior.

Economics is about how people get money and then what they do with it -- that's all. All the complexity stems from the math required to try to figure out exactly what people are doing to get it and what they are doing with it. Detail is not necessary to understand what is being observed, only to be precise, and precision is not necessary to settle a question as broad as how it is that jobs are created. It is especially not necessary when brute force is needed and finesse is irrelevant.

Understanding the practical mechanics of how jobs get created is also not necessary. Distilled down to basic principles, jobs are created by demand for goods and services. Demand comes from consumers who have money to spend. Whether or not consumers can get enough money to spend on something is the problem our public and businesses have faced for the last four years.

The only real political question at stake in 2012 depends on whether or not you can follow this logic. If the consumers in an economy have no money they will not be able to buy anything. If consumers aren't buying anything then it's called a recession. If you can follow that logic, then you are prepared for making a decision on the solution to getting America, and the world, out of this recession hole that we are in.

Conservatives say that jobs are created by "job creators." Jobs are, in fact, created by humans with a motive to hire people. The only motivation there is to hire people is making money off their labor. If you can't make money by hiring someone, you will not hire anyone.

Liberals, and most economists, say that jobs are created when a "job creator" is motivated to hire someone. Businesses do not hire workers just because they have the extra cash to do so. From an individual businessman's standpoint, that would be stupid. From a government standpoint, it is your job to make sure hiring happens.

Conservatives simply gloss over the essential step of motive. Conservatives say that money and tax cuts are all that is necessary for the "job creators" to hire people, and that is so fundamentally stupid an assertion that it can be rejected out of hand as sophomoric. The only exception is entrepreneurial enterprise, but then the investors who would fund an entrepreneur still need motive to invest, and they are investing at historical lows right now because of that.

How do you motivate a businessman to hire? You motivate him with customers who can pay.

How do you create customers who can pay? You create customers who can pay by motivating the "job creators" to hire more people or pay the employees they already have more money. But, the "job creators" will not do that without a motive to do it.

The circular nature of the problem is inescapable. No motive no hiring, no hiring no motive.

That's where government, for the 80 years since FDR led the way out of the Great Depression, has always served to break the circular conundrum. Government can do any one of several things, in the long and short term, to break the self reinforcing stalemate of employers waiting to hire until other employers do so first.

Long term, government can foster unions in the private sector. Unions serve to keep increases in pay at parity with increases in productivity. Medium term, government can tax profits that are not reinvested in the operation of a company, motivating hiring if only to avoid taxes. Medium term, government can manage trade in favor of American jobs and wages instead of the opposite. Short term, government can borrow/print money to inject directly into the economy to provide motive to hire people to earn that money from the government. History suggests that these types of government jobs create momentum in the economy that persists after the shot in the economic arm.

What these measures by government -- fostering unions, structured and progressive taxation, trade and stimulus -- do is characterized as one thing by conservatives. They call it "redistribution of wealth." Obama called it a "need to spread the wealth around" in a verbal exchange with Joe the Plumber. Obama was right. We, as a country and as nation among nations, need to recognize that if the wealth is not spread around, then the consumers on which business depends for profit and growth will wither up and disappear. No one will be "creating" a "job" for anyone if there are no consumers.

The answer to our economic woes is not to give control to a political party, the GOP, that does not even understand what it is that their philosophy has wrought for us in the last 30 years. The answer is to reestablish the control of our government in the hands of people smart enough and responsible enough to the public to fix it through breaking the circular feedback of motives that are keeping the economy from recovering. Raise taxes on the rich and spread the wealth around. Intervene on behalf of unions. Raise the minimum wage and regulate trade. Right now, when the Fed is actually fighting deflation as hard as it can, is the ideal economic opportunity to do so and recover from the deficit of Republican thinking that has driven America into the economic crapper. Then the deficit and debt will, to borrow from Romney, self deport.