Demand is a function of price. The fact that you have desire for a product (demand when sell price=0) does not mean you have any demand left at the price it takes to make that product. So employment does create demand at prices higher than zero even though it doesn't change existing desires.
Below is a lesson in supply and demand. "IN 1966, the price of eggs rose to a level that President Lyndon Johnson judged, God knows how, was too high. There were two culprits - supply and demand - and Johnson's agriculture secretary told him there was not much that could be done. LBJ, however, was a can-do fellow who directed the US surgeon general to dampen demand by warning the nation about the hazards of cholesterol in eggs." http://www.nypost.com/seven/1229200...bj_the_egg_czar__other_govt_heroes_146265.htm
Ok, let's move past the words s&d, as you're mainly talking about essential commodities and certainly these are going to be purchased above all else. People have to buy certain things, so they will go to extreme price levels to continue purchasing them. But the US economy is not built on essential commodities. We are a nation of consumers. Consuming mostly what would be considered fairly frivolous stuff. Movies, cable tv, trading in cars every 2-3 years, eating out at restaurants several times each week, buying $100-200 pairs of jeans, iPods, etc. If you don't have a job and run out of money/credit, the demand for these items goes out the window very quickly because they are not essential to survial. Soon the retail stores, restaurants, auto dealers start to lay people off, due to low demand. Explain the drop in GDP. It was due to a drop in demand, which was created by destroyed wealth and the loss of jobs (as well as the fear of losing jobs). By the way, I'm not saying the goverment should freeze firing obviously as I'm a free market advocate. But to think that demand will not fall due to rising unemployment is not logical to me.
Also, your example of water and Michigan/Saudi Arabia is flawed. Demand for water is not the same in those places due to the scarcity and therefore price. Very few in SA would water their lawn to keep grass/hedges green, whereas in Michigan, this is done all summer long. The desire for water may be the same, but the demand (how much is actually purchased) is not. I would bet that the per capita water consumption in those two places is completelyd different. Let's look at another example. Take food for example. We in the US are downright fat, because food (an essential commodity) is so cheap compared to wages. Look no further than Africa/Asia, where wages are much lower and you'll see that the demand is much lower for food. These people desire to eat as much as us, but are unable to pay for it, so many of them starve. I'll grant you that desire for stuff, never changes, but demand certainly does, based on employemnt/wages.
people who are 'working' are SUPPLYING or producing a service or good. gov't provides essential services, schools, hosptals, policing, roads etc. when the are working they are also demand. GDP goes down if people are not PRODUCTIVE (working) idle human and industrial capital. there is you supply and demand equation.
I was questioning the poster I quoted on the first page. Also work does not mean demand I could work make a million a year and create as much demand as a bum on the street by living in a tent and growing my own food like a miser.:eek:
I don't see any difference between essential and non-essential commodities. There is a point with ALL commodities that people will stop paying. Overcharge for food and water and you'll see gardens and wells popping out of the ground. $100 jeans, cable TV, and other non-essentials have been in high demand since the birth of Hollywood and the Hollywood lifestyle. Ponzi economics created the possibility of ridiculous spending by not rewarding frugality and not punishing consumerism. The demand for the "high life" never came from employment; it was always there. The fact that consumers had to go into debt to keep the luxury industries afloat means nothing. The so-called drop in GDP never happened...the GDP numbers were fraudulent to begin with. GDP was based on lots of "forgotten" liabilities and "marked to fantasy" assets.
I don't think 2,000,000 service based jobs contribute anything to GDP in the first place. Shuffling money around does nothing for GDP. Only productive jobs contribute to GDP...that's precisely the reason why government ditch digging does nothing.
I partially agree but to say the service based sector does not contribute anything to GDP is extreme. There are service sector jobs that contribute efficiency to the overall economy. Education, technological services such as internet, financial services which direct capital and many other service sector jobs create efficiencies in the economy.