Rich People Are Not Job Creators Sez Business Week

Taxes on the rich stimulate economies. If you don't believe me, maybe you'll believe a non-communist billionaire entrepreneur who's started several successful companies, writing in the certifiably non-socialist magazine Bloomberg Business Week.

Hanauer has this to say: "I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.

"That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be."

Not only is the term Job Creators a lie, it is a lie that kills jobs. It protects and rewards the idleness of capital and impoverishes the average consumers who actually do create jobs in their millions by buying stuff and paying for services. Impoverish the average consumer and you put capital to sleep in the pockets and closets and jewelry drawers of the very rich. By lowering the taxes on the rich, especially the rich heirs who've never worked or created a job in their lives, and you incentivize the idleness of wealth and penalize the hiring and paying of workers.

Henry Blodget does a great job of explaining the dynamics of what Hanauer is talking about on the website Business Insider, another non-anarchistic non-socialist business publication.

Blodget: "For a specific example, Hanauer points out that his family owns 3 cars, not the 3,000 that might be bought if his $9+ million were taken home by a few thousand families.

"If that $9+ million had gone to 9,000 families instead of Hanauer, it would almost certainly have been pumped right back into the economy via consumption (i.e., demand). And, in so doing, it would have created more jobs.

"Hanauer estimates that, if most American families were taking home the same share of the national income that they were taking home 30 years ago, every family would have another $10,000 of disposable income to spend.

"That, Hanauer points out, would have a huge impact on demand — and, thereby job creation."

As I've pointed out before a multi-millionaire CEO who justifies his raises by lowering his employees' pay and benefits doesn't take his five million or hundred million dollar paycheck and buy a thousand refrigerators or a hundred cars as his employees would do. He buys another company and makes it leaner and meaner, or he buys his wife or mistress a $50,000 tennis bracelet. Tax cuts to rich people do not create jobs because lower taxes disincentivizes investment in the factory or the employees. Rewarding up and taxing down kills economies. It rewards rich people pocketing their gains, what I prefer to call hoarding. It certainly ain't job creating.

If you prefer, I first heard Hanauer's story on NPR. Consider this, if taxes are lowered on rich people they have less incentive to give money to public radio.

The 99% Are Being Heard

Most of the mainstream media still don't "get" what the Wall Street protests are about. This CBC interviewer tries rubbishing the protesters in the usual way, and Pulitzer Prize reporter Chris Hedges politely explains where the interviewer is wrong and then calmly folds the man up and puts him back in his sanitary wrapper.

There must be a circulating rule book titled "How to Dismiss, Insult and Marginalize Anyone Who Opposes the Total Power of Hedge Fund Billionaires", which instructs network talking heads how to be rude to people outside the money elite. Most TV hosts are contemptuous of this movement, and contemptuous in the same way, using the same words, the same references to the 60s and hippies and drugs and guitars and bongos. There has to be an approved script. Maybe Frank Luntz provided it.

(You might not know this, but most TV talking heads live in small furnished apartments inside the pockets of the expensive suits you see billionaires wearing when they creep from marble office to forty foot limousine. So talking heads are always alert to the moods of their billionaire hosts. Sadly, they have a tin ear for the lives and concerns of the real people living on the other side of the TV screen.)

Good news. According to this story in Business Insider, the Occupy Wall Street movement, sometimes called "The 99%", are twice as popular as the "Tea Party" movement (which is paid for and fully owned by the Koch Brothers and other billionaires).

The movement is spreading and gaining allies. It has a way to go yet. Take a look at the popular protests that took place in Paris in 1968. They were huge. They involved everyone, every class, every walk of life. Their mistake was resorting to violence––if they hadn't they would likely have succeeded.

The trick of true influence is a mixture of assertiveness and patience. The 99% have a real message. They are us. They are teachers, electricians, firemen, students, nurses, engineers, small businesspeople, retirees, people from working and middle class neighborhoods.

The majority of Americans agree that concentrated wealth has harmed the economy, made it less stable, less sustainable. We aren't pushing for confiscation of capital, we are talking about putting capital to work the way we used to. Putting Americans to work, and paying for that work in a way that strengthens the entire economy not just the top 1%.

Call it liberal if you like. But wouldn't a true conservative want to restore and keep the institutions and rules that have worked well for us? The system that grew out of the New Deal worked very well between 1945 and 1980, the most prosperous period in American history. The Republican revolution dismantled that system, and we've seen what happened. Look who's prospered and who hasn't.

The Late Great Middle Class

For the past generation the Middle Class has been stuck or declining while tip top incomes and accumulated wealth have grown enormously. Taxes that previous Republicans thought fair have been labeled "Communist" and "class warfare".

Taxing the rich isn't Communist. Nor is it Communist to pay working people decently; it's practical. Better paid employees pay the taxes that build the roads but they also make better consumers, which makes a stronger economy. A topheavy economy, like the one the Republicans have built, is unstable and more likely to collapse. Here is an excellent report from the BBC website.

Business insiders are noticing what's happening to the middle class, and they're worried even if the very rich don't care. They know you can't run an economy on jewelry and yacht purchases.

As noted in The Economist (hardly a leftist magazine), this ongoing recession, caused by the recklessness of the largest investors and financial institutions, is causing the impoverishment of the middle class, but is also discarding an entire generation of young people. New graduates from college may never gain their footing, careerwise and incomewise.

And there's this, from Forbes, on Rick Perry's odd rant that the middle class doesn't pay its share of taxes.

It isn't only the "liberal" media that's acknowledging how our tax structure tilts to benefit the upper classes. (And how it doesn't create jobs.) Responsible conservative journals are writing about it too. Our economy is unfairly rigged. Besides being unfair, it's also less productive and impractical.