Will Obama see truth of job creation?

Memo to president: When companies make more money, they hire more workers. It's that simple.

By Jim Cramer Dec 13, 2010 9:52AM

The meeting at the White House this week has to be different. Many of the CEOs who have gone to see President Barack Obama so far have told me the meetings are superficial, totally done for the media. Photo ops. They are not substantive. They say the president doesn't understand how big business works. He thinks it is parasitic and all about profits, not about doing the right thing.

 

That's why Wednesday's meeting is so important.

 

We need the execs to leave with more than a photo. We need them to say that he listened and that he is going to take action on what they have to say. I just don't know, ideologically, whether Obama can accept the idea that hiring is a byproduct of CEOs trying to make a lot of money for themselves and for their shareholders.


He seems to think that the process of making a profit may actually be wrong because it doesn't necessarily help labor. Or at least he seems to have felt that way ever since he took office. Post continues after video:

Of course, when you are running a company to make money for yourself and for shareholders, you are doing the right thing. That's the mission. It is the mission under American capitalism, for certain. But the president seems never to understand that such a motive is OK, even good, and that there is nothing wrong with trying to make money for the people who own your shares.

That has to change. When he meets with the CEOs, he has to understand that the corporate profit motive drives the progress and success of Brazil and China and India. He has to understand that those countries, which are ostensibly to his left, are actually much more pro-capitalist and pro-shareholder. That few in the media or politics are willing to say this smacks, to me, of the bias we are all too aware of.

 

Obama seems not to understand that it is NO COMPROMISE to help people make money in their 401k plans. That there is no sin in allowing people who own stock to make money. It is not like making some rotten deal with the GOP -- it is about doing what is necessary to get the country moving.

Until he gets that ethos, these meetings will mean nothing.

 

Let's hope this is the week when he changes. If he does, this market could have a nice run, simply because the president will not stand in the way. That would be a first.

 

It is time for a first.

 

Jim Cramer is co-founder and chairman of TheStreet. He contributes daily market commentary for TheStreet's sites and serves as an adviser to the company's CEO.

 

Follow Cramer's trades for his Charitable Trust.

 

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31Comments
Dec 13, 2010 5:16PM
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Jim Cramer needs to learn, as do corporate CEOs, that making money for shareholders isn't enough. Corporations have an obligation to support the communities in which they operate and make those profits. Part of that support includes providing employment at a living wage. After all, corporations exist only because the people allow them to. There is no inherent right for a corporation to exist. It is not a human right. When a corporation fails to be socially desirable the corporation should and will be shut down.
Dec 14, 2010 8:27AM
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What kind of economics class did idiot Obama take?? 3rd grade??  As an american adult I invested my money in a 401k which is now half of what it was when I retired at age 50. He acts like he doesn't understand how things work. Companies have to have orders so they can hire workers we need jobs yes but not at a cost of driving these companies into bankruptcy by hiring people they don't need.

Dec 13, 2010 7:51PM
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I'm gonna go out on a limb here and state what seems painfully obvious to me - something that will nevertheless make me seem an iconoclast to some ...

NO business is in business to make money. Did you get that? Businesses don't exist to make money.

I am an investor and a shareholder, and as an investor, I want the leadership of the companies I invest in to keep their priorities straight.

1. You are in business to create a product or service that delivers value to your customers or clients AND TO DO THAT BETTER THAN THE COMPETITION.

2. Then - AND ONLY THEN - do you have any business making money. If you keep your eye on #1, #2 will take care of itself. Give short shrift to #1, and you won't have a #2 to worry about.

Oh, and while we're at it - again I say this as an investor - the creation of shareholder value should come a distant 4th to #3 ...

3. Take care of the people (the collective goose, if you will) who lay the corporate golden egg. It takes only fractional genius to realize that your associates are the other side of the value-creation coin. Treat them like the assets they are, and again, the money will take care of itself.
Dec 13, 2010 3:38PM
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Jim, lets look at the facts. Under Obama corporate profits just hit a record in the history of the US.,  the top 500 companies in the US have 1.8 trillion on their balance sheets, in the first round of stimulus there was 385 billion  in tax cuts for small business, under the current tax proposal business can expense enormous amounts of investments instead of depreciating them over years, finally there will be 33 million new customers for the health care industry and more tax credits for business to help pay their share of the health care premiums.  How can you possibly state that Obama is anti-business? They never had it so good. It's clear what big business wants is more corporate welfare at the expense of the working class. Jim, your a smart guy. You should know better.
Dec 13, 2010 3:17PM
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What a load - this article is a plain lie.  How did these CEOs make out under our "pro-business, CEO president" George Bush?  I seem to remember at the end, these CEOs came to DC with their hat in hand looking for us to bail them out of the sorry mess they had made.  Republicans gave the business community everything they wanted, and look what happened - a total economic catastrophe. 

Democrats like myself don't hate business - we hate bad business that does long term harm to our country and its people.  Let me simply state this - no Democrat needs a lecture on business or economics from any Republican.  I'm a democrat who's made a lot of money in private enterprise - I made a lot less while GWB and his Republican cronies ran things...
Dec 13, 2010 3:14PM
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Think about this - Banks are a business and were allowed to run free, basically unregulated and what happened with that? Acting in the best interest of business DOES NOT (and no one will ever convince me otherwise) mean it is good for this country, our workforce or the impending collapse of quality of life my children will see. But to some, "just having a job" is all that I should expect all the while my benefits and rights are continually being eroded under the guise of competitiveness.  It is in this environment that I seek some voice in government to try and protect that to a degree. It is too easy to sit back and say profits are all that motivate a business. Of course business ethics went out the door decades ago even for small businesses that only seek to satisfy greed. I know something about business and if I alienate my customer base at the expense of profits then I will be out business sooner or later.
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Actually, real, long-term profit is a by-product of successfully running an enterprise.  Pursuing quarterly profits to raise stock prices and increase executive bonuses is not successfully running a business and in the long run will not be what is in the owners (stockholders) best interest.  This is true in all cases and we haven't even mentioned dishonesty which was the primary cause of the financial crisis.  What amazes me is that since the '80's, we have managed to weaken the laws and regulations to such a state that most of the dishonest and unethical activity practiced by banks and many other corporations is not even illegal.  Sad.
Dec 13, 2010 2:50PM
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So many problems Jim, but I'll stick with my main one.

 

If you're so concerned about stocks and profits, why are you so unconerned with the demand side of the equation?  You kee hearing it: "profits are up" so hiring shouldn't be the problem it's being made.  Pointing this out gets a lecture in that business won't expand unless it sees the demand to expand for, putting us in the chicken and eggs scenario.  Jobs won't be created without demand for goods, demand for goods won't go up until people earn a wage that gives them money to buy goods over and above their bills. (a functioning safety net to keep them from "living in poverty" paranoia aslo wouldn't hurt.)  I've said it repeatedly: stocks rise from profits.  Profits come from sales.  Sales come from wages.  Take away the ability of the consumer clas to spend, you strangle your own portfolio.

 

Beyond that, I think the private sector need to act more businesslike in this and spell out exactly what hiring and expansion Obama is keeping them from doing.  They wouldn't invest money in someone providing no details or business plan.  Why should the government cut a blank check on big promises and no garuntees?

Dec 13, 2010 2:45PM
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You're full of crap! Another loud mouth spewing lies.
Dec 13, 2010 1:31PM
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If tax cuts got people back to work ,everyone would be working right now.After all we just had ten years of them. B S.

Dec 13, 2010 1:30PM
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Cramer should know better than to tell so many lies.  Corporate CEOs could be hiring millions of workers this year (2010), but they think their mission is to make the White House look bad.  The DOW went from 7000 to over 11,000 in the first 2 years of this administration - the crippling recession was stopped in June 2009 - Christmeas retail sales are booming. And yet, Cramer and his greedy ilk continue griping and whining.

 

The immoral corruption of conservatives is going to destroy capitalism.

Dec 13, 2010 12:38PM
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I love when Republicans try to rip the performance of Obama with pathetic excerpts from corporate backed news stories and other lame fear tactics.

 

Republicans love to talk about how bad Obama is doing helping us try to recover from the Recession. Earth to Republicans, we are "recovering" from an 8 year Republican administration which panicked after 911 and made terrible decisions which put us in the situation we are in today. Terrorists knocked down our largest building in America, it was not the end of the world. Instead of letting the economy correct itself, post 911 saw George W making the worst decisions ever!

 

Obama did not cause current unemployment rates,  Bush did when he allowed Greenspan to double the prime interest rate in a span of 18 months in 2005 through 2006, crippling the countries financial structure, (after his 2nd term started). Maybe he should have been more aware of the avg. americans ability to pay their mortgages when rates double in a year and a half. I guess he was more concerned with "bombs bursting in air" over the middle east.

Dec 14, 2010 2:57PM
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Active RIA - what are you talking about: "SS, that program was never, ever, never, never, never intended to be a retirement program".

 

Yes it was.  The Social Security Act of 1935 and its amendments over the years are the OASDHI - old-age, survivors, disability &health insurance program.  It contains language referencing "retirement benefits", "retirement age", etc.

 

There are millions of people living off of SS as their retirement fund.  You just tell people that in order to scare them so that they will pay you to help them invest.

 

What you mean to say is that it won't provide you with a lavish lifestyle if one wants to travel, play golf, and sip $5 drinks by the pool.

Dec 14, 2010 11:35AM
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Come on Cramer, we the people are wide awake and we know for a fact that greed and capitalism are synonymous. If CEOs could make profits without hiring, they would do it. The fact that they offshored so many of our good paying jobs and are constatnly trying to kill labor unions is all the proof we need.

The President  is not there to follow the lead of the CEOs, they are there to follow The President's lead. They need to publicly apologize to the people they took for billions and start the hiring process to restore America to it's glory as a leader of the free world. Economically, philosophically, in science and tech and education and social reform. Do it now, CEOs or you will be forever hated.

Dec 14, 2010 11:11AM
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CEOs are trying o blackmail AMerica into giving them another trillion dollars to stuff in their fat accounts. The Brits are taking on their monarchy in the street - it could be that the time is here to give the CEOs what they deserve.

 

Cramer is told what to write by his corporate masters - MSN should stop paying for his crap that tries to rewrite the true events that led to economic disaster.

 

 

Dec 14, 2010 11:04AM
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Cramer is told what to write by his corporate masters - MSN should stop paying for his crap that tries to rewrite the true events that led to economic disaster.

 

The CEOs think they're entitled to defraud the public and take away the livelihood of workers. Those unemployed workers would rather be doing the jobs they had before being laid off by management. Why? Because management has forced the workers to shoulder the RISK...  the CEO and investors get the wages taken from families  because corporate masters think they are entitled to rob America, to enrich themselves.

Dec 14, 2010 9:13AM
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Todays "I am entitled mentality" is not just a new form of greed but also a new form of arrogance.
Dec 14, 2010 9:04AM
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Obama's behavior is a new social justice mentality that redefines the term "greed".  In other words, who is really the greedy one? People that simply want to keep what they earned, or those who want to take from you something they did not earn. 

 

It is not about a safety net anymore, it is about "entitlement". The worst form of greed is thinking you are entitled to something. 

Dec 14, 2010 7:55AM
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If you look closely at the posts, you can see who people really are, if they are for buisness or against business and want to be supported by a socialist regime. America was founded on innovation and the belief that as a person we can do what we can in any job. But from some of the posts I see the socialist view of slobama in their posts and see that they are the ones who want to sit on the corner, drink their beer and live on welfare as the working men and women support them. Welfare is an entitlement and needs to be stopped. Slobama doesn't get it because he has NEVER ran a business nor has he ever worked a real job. If he would quit going on vacation and open his eyes, he may see the destruction he is doing to the American Dream. Slobama needs to man up,  go out and actually work one day and see what its like to be in business. It takes tax cuts and money to make a business run and the government cant make jobs.
Dec 14, 2010 12:17AM
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Cramer, once again you are spot on.  This President is clueless concerning Business.  On Nov 2, he was castrated by the American voters and may now come to realize the foolishness of his ways.  He is an anti business socialist and Union lapdog.  He is a disgusting insult to Capitalism and the American way. 
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