There’s a lot going on about the Economic Stimulus program and how it has not created jobs, but actually “saved” people from losing them.

However, the only thing that actually creates job is one thing: free markets. Let me explain.

When you go the store, say, looking for a piece of bread, you’ll have dozens of different breads to choose from: white, wheat, rye, with fiber, without gluten… All of these in different sizes, brands, and price levels.

At the same time, other millions of people are also deciding what type of bread to buy, creating an intense competition among bread makers to gain market. How do they do it? They employ thousands of people to “design”, test, advertise, make, sell, transport, and make sure that their bread’s up to what the market needs.

Imagine all what goes into a simple package of bread. Thousands of people go to work everyday to make sure that consumers get the bread (or car, or pen, or computer) they want. So, jobs are created. [picapp align=”right” wrap=”true” link=”term=bread&iid=5066732″ src=”6/5/2/5/Male_market_stallholder_931c.jpg?adImageId=7658814&imageId=5066732″ width=”337″ height=”506″ /]

Imagine now that you’re a small bread maker. You decide to open shop and start selling your grandma’s recipe that you loved so much as a kid. People start buying your bread. Then, you decide you can’t do it alone and hire your wife to help you make more bread. Maybe a couple of years later, you not only have one store, but two, and employ 10 people.  So, your business is not only feeding your ten employees, but also the suppliers that sell you the eggs, the flour, the butter, and all the fine ingredients you use in your bread.

Besides hard work, what made your business prosper? The free market. The fact that people had the choice of thousands of brands of bread and decided to buy from you, because you offer them a product that fulfills their needs.

What happens if you don’t? Then your business will fail. As hard as you try, if you don’t fulfill your market needs, as hard as you request billions of dollars to rescue you (yes, like GM), if your company doesn’t fulfill your clients needs it will fail.