Just remember that great historical endeavors, like defeating
tyranny in the 1940s and going to the moon in the 1960s, were
motivated by
patriotism. LFM. December 6, 2011.




    The economy should not overpower us. It does not work autonomously or beyond
    our combined will or consent: It is simply the outcome of [seemingly] complex human
    expectation and behavior, and since we can make rational thinking prevail if we try,
    our economic system can keep the economy working well for the benefit of all.
    Please read my following article. We can make the economy behave. It’s up to us.
    Sincerely,
    Luis F Molina
    June 12, 2011


    Hiring vs. Efficiency and the Key for Economic Recovery
    [Message sent to the White House on September 16, 2010]
    [This Style Revision Published on December 7, 2011]
    By Luis Felipe Molina

    Leadership and patriotism are the key for economic recovery.

    The unemployment rate is determined by the aggregate amount of hiring / firing
    management decisions in the economy. And it´s ONLY by means of a net increase of
    management decisions to hire people that the USA economy (and the economy of other
    countries) may settle at the optimal amount of unemployment –which ought to be of less
    than 5%.

    But hiring decision-makers, owners and managers of small to large companies, will not
    hire if they believe this will likely hurt immediate profits rather than bettering business
    prospects for the short-to-medium term. Decision-makers will not risk deteriorating the
    business efficiency they felt they were forced to augment due to deformed economic
    uncertainties as perceived by the general opinion.

    Companies of all sizes are benefiting from payroll tweaks they felt compelled to make.
    Even with shrunk sales, there are better profits thanks to increased business efficiency
    mainly from fine-tuned labor productivity –resulting in a smaller but “fit” economy that
    sadly secludes part of the population. A trend to hire the excluded workers will not surge.

    Therefore, if nothing extraordinary happens, large unemployment will continue for an
    overly extended time –possibly even for a few decades, as now more efficient companies
    of all sizes will continue doing well even with prolonged national and global excessive
    unemployment. Not even ingenious fiscal stimulus measurements of all sorts, hoped to
    promote via either consumption or investment, would be able to work sufficiently -since
    any stimuli need to pass through each company´s perception and assessment of its
    efficiency and actual individual risks, both in specific business microeconomic situations.

    Leadership and patriotism are the solution.

    Public sector leaders and institutions must strive to motivate businesses to hire again:
    The President, governors, majors, congressmen and other public sector leaders must
    work hard, in a healthy competition, to convince businesses to hire in excess at their
    microeconomic levels –anticipating that if most companies hire simultaneously –using
    available savings, the revitalized aggregate consumption will provide with increased
    sales and profits. Private sector leaders, companies and institutions must campaign
    similarly or join in the public sector´s effort to convince companies to hire –generating
    the profits, salaries and fiscal revenue required for the good of all worldwide. Private
    investors must keep hiring enough, thus satisfactorily performing one of their crucial
    roles -in a constant reflection of the bold entrepreneurship that makes the USA great.

    Given the about-9% stagnant unemployment rate, if a company has 20 employees,
    it must hire just one additional employee. Similarly, if five companies have an average of
    four employees for a total of 20 employees, then one additional employee must be hired
    by one of those five companies. Likewise, if one company has 100 employees, it must
    hire 5 employees.

    Since fiscal stimulus alone will not make trends change and no random / autonomous
    phenomenon will make hiring habits/norms (currently more efficient) change, motivation
    to hire needs to be rooted on patriotism with a vision of wellness for all in the short run to
    medium term.....Hiring decision-makers (owners and managers) need to seriously realize
    that continuous excessive unemployment will eventually hurt all in several ways: On the
    contrary, a sustained equilibrium level of unemployment will keep consumption right
    which will continuously invigorate investment for the benefit of all –from rich to poor.

    The biggest real thing in the economy is GDP. Fiscal and financial troubles are generated /
    exacerbated by curbing consumption and investment, whereas the operation of factories,
    shopping malls, agriculture fields, banks and all other real components in the economy can
    be easily revitalized if the people (the consumers) just had enough salaries.

    We don’t want too much unemployment, so we need to employ. But now the way to this
    the solution is not so simple: It requires realism and a commitment moved by patriotism.
                                                                                                        
    Luis F Molina


    PS1:... Even if the patriotic hiring was only a good fraction of the amount I propose (let’s say it was
    just 2.5% of current payrolls), if it is simultaneously performed, it will be timely supported by
    additional sales, and it will be massive enough to trigger more than full economic recovery:
    Investment will be supported, and consumption and profits may contribute to government
    budget balance from the fiscal-income side.

    Of course, I do not have empirical evidence on that. But, virtually there is no conclusive empirical
    evidence in economics. Fortunately, the basic, great issues on economics are straightforward: The
    economy is a reaction to human attitude; and, although human economic behavior appears to be
    too difficult to be modeled, it is also clear-cut if seen with common sense (“the less common of
    the senses”), while it becomes too complex when seen just scientifically.

    Intuition emanates from knowledge and experience, and the economist ought to value their
    own intuition. Who more suited than the great economists of the world to propose a solution
    if their recommendation is a reflection of their intuition rooted on their previous knowledge?
    I would humbly beg them to urgently proceed.

    I hope the great economists (of whom I once dreamed to be like) would consider and adopt
    this my straightforward and very effective solution. It cannot harm.

    Luis Molina
    August 07, 2011

    Just remember that great historical endeavors, like defeating
    tyranny in the 1940s and going to the moon in the 1960s, were
    motivated by patriotism. LFM. December 6, 2011.

    PS2:
    I have been reluctant to provide additional explanation of my proposal above, but I am
    giving up and will comment as follows:
    In the fourth paragraph of my proposal above, I suggest that no fiscal stimulus measure
    will have a sizable-enough effect on job creation and on sparking economic recovery neither
    via consumption nor via investment: On one side, the increase on the effective demand of
    services and goods that a realistic increase on government expenditures (under the current
    deficit and debt situation) can create: (1) will be partially offset with productivity increases,
    including inventory reductions, not necessarily with new jobs in the private sector, (2) it is an
    inflationary measure and (3) it is opposed by a proportion of private-sector job creators. On
    the other hand, companies have not been hiring mainly because of uncertainties about the
    effective demand for their own individual services and goods, not for lack of capability to
    invest due to lack of money or access to financing, thus massive-enough job creation
    cannot necessarily be expected from business tax reductions. In general, what will
    make the combined hiring in the private sector reach an intensity consistent with
    economic recovery is the improvement of the individual company´s microeconomic-level
    expectation about the probabilities (real or not) of their individual increases on sales and
    profits in the short run.
    However, as opposed to these two alternatives, my proposal to fix the economy via public
    and private-sector leadership and concerted (mutual) patriotism allows the private sector to
    create all needed jobs and the corresponding sales simultaneously to trigger full economic
    recovery and added prosperity for all into the short run in the USA and worldwide.
    No economist will disagree on this after giving proper consideration to my proposal.
    Besides, applying my proposal cannot harm.
    Luis Molina
    October 17, 2011


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Overwhelming uncertainties about the economic troubles in
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Solutions, however, should not be that
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Besides the article above:
(1) Clarifications about Remarks by R. Rios R.
(2) Do Not Be Over-Concerned About Stock Markets
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U.S. President Obama and German Chancellor Merkel at the G20 Meeting in France on Nov 3 2011