Production only drives the economy to the extent that people want to buy things that are produced.
If they don't, then that which is produced will no longer be produced, and that which people do want to buy will continue to be produced. But it is production that creates demand, and it is production - the creation of wealth - that expands the size of the economy. True, that which is produced must have a market, but buying products - spending money - cannot be understood to "drive" or ground economic growth and prosperity. The reason should be obvious: all the money used by consumers to buy x has itself been generated by other productive economic activity, such as producing y, creating and maintaining m which produces y, creating p which is used in the manufacture of x, and on and on. While without buying there is no production, without production there is neither buying
nor anything to buy.
Supply - created wealth - drives economic growth, not demand. The money you use to buy anything you want does itself not exist without your own participation in production - other production, which supports and is made possible by other production, which is made possible by other production, and on
ad infinitum.
In fact, if something is produced for which there is absolutely no demand, it’s hard to argue that anything was produced at all.
Quite true, but anyone producing something for which no demand materializes will soon not be producing at all. The market will filter that producer out of the economy.
Businesses make products (and money) when there is demand for the products and services they offer.
This is only true with regard to established products. The economy grows primarily by the introduction of new products/services for which no demand exists at present, but which is generated and stimulated by the emergence of the new products/services. A growing economy is not maintained by a static production of nothing more than what has already been produced before.
He happens to be ultra-conservative and has an irrational fear of Obama,
Deep fear of Obama is wholly justified by both his policies and his intellectual and political background.
and thinks America is going to hell in a hand-basket.
Yes, it is, and has been since the 1930s. Obama is heir to a historic confluence of political and cultural factors that have allowed him to attempt to put the final nails in the coffin of classical liberalism and the Western liberal sociocultural tradition that emerged in living form in 1789.
He would totally agree with your narrative that the weakness in the economy is because of the liberals. You’d like him.
It is not "liberals" who are attempting to destroy the economy and the social/moral fabric of American society (a project which began in earnest in teh late sixties), but
leftists. It is
progressivism that is the juggernaut of destruction seeking to end free market economic relations, property rights, Judeo-Christian social/moral norms and constraints, limited government by the consent of the governed, natural rights, and the rule of law.
Despite the fact that he ascribes to the narrative that businesses aren’t hiring because they are afraid of the government, he is hiring and is expanding his business like crazy. Why, you might ask? Because of demand. Regardless of what he thinks about Obama, there is a huge demand for oil, natural gas, and stuff people extract from mines. Because of that demand, industry is drilling and digging like crazy. And because they are engaging in those activities, there is a demand for the castings my acquaintance produces. Because of that demand, he is expanding his business; since his customers purchase castings as fast as he can pour them, he’s doing everything he possibly can to make more and more castings, faster and faster.
Which is why the economy is collapsing, correct? Unique, individual circumstances can always be deployed in an attempt to move from the particular to the general without logical connection or the larger empirical picture (and we know what that is).
If there was a bigger demand for homes, builders would build more homes. If there was a bigger demand for new cars, the auto industry would being doing everything in their power to produce more cars. The same goes for everything.
What creates the demand for cars? The production of cars. Who are the producers of cars? Consumers. What are consumers? Producers. Production - the creation of new, net wealth - is the central organizing principle of economic growth, and it is only in economic growth that large scale prosperity resides and relative affluence among all classes is made possible. In a sense, spending money is incidental to production. If you don't by my product, I go out of business, but if I (and countless others) do not produce products and generate new forms of wealth, there is nothing to spend money on. There is also no money to spend, as this medium of exchange is the mediating form of property between one form of production and another.
The real problem with the economy is that people with money are purchasing everything they want and are saving the rest. However, the savings isn’t balanced with the need for capital and the desire of credit-worthy people to borrow. People want jobs to produce things, but the folks with the money don't want to spend it.
This thinking is exactly how the Great Depression was created by government out of a severe recession that should have been over in a few years. Business is not going to invest again, nor are people going to spend money (people who are out of work and on food stamps save, they do not spend, unless massive general price inflation incentivizes such spending of limited funds)until Obama is gone, because the chaotic regulatory and tax burden he has created, along with a crippling national debt and a alarmingly devaluing currency, have created a toxic economic environment.
Business now faces among the highest corporate tax rates in the industrialized world, confiscatory personal income tax rates, substantial dividend taxes and capital gains taxes (which disincentivize savings and investment and encourage private spending in lieu of the generation of new economic activity), massive estate taxes with discourage the passing on of productive wealth to heirs, and numerous layers of suffocating taxation throughout virtually every area of the economy, including crippling business regulations that are also a tax on work, savings, investment, and risk.
The EPA's onrushing pseuodoscientific endangerment ruling regarding CO2 has the potential to utterly wreck the economy quite without reference to Obama's budgets, wild fiat money creation and spending, Obamacare (containing at least 21 new tax hikes) and produce really substantial and obvious decreases in living standards.
Nothing about Obama's assault on free market economic relations, achievement, success, property rights, individual self sufficiency and economic independence, and his fevered egalitarian redistributionist ideology, is accidental, or a manifestation of witless stupidity. This is, in essence, the Cloward/Piven/Alinsky model of socialist revolution through the overwhelming and pressuring of the system until it grinds to a halt and collapses.
Keynes himself would not, I think, have approved of his being pressed into the service of Marx.