A Voice from Business on Creating Jobs

[This just in from Bloomberg Business Week!  Read it all before you react. I think some will find this surprising and informative.]

Raise Taxes on Rich to Reward True Job Creators

By Nick Hanauer
December 07, 2011 10:22 AM EST

It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.

Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.

I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc.

Even so, 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.

Theory of Evolution

When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.

It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.

That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.

And that’s what has been happening in the U.S. for the last 30 years.

Take time to read on here. 

"Trickle down" turns out to be "rush up"

For years, and especially since 2008, we've heard expression after expression of fear that the nation is in the midst of a great "redistribution of wealth" from the rich to the poor. We've been told that the United States is on the cusp of falling into a thoroughgoing shift to socialism. Nothing could be further from the truth. Well, almost.

It is true that there has been a great redistribution of wealth going on. As a matter of fact, it's been underway for the past 30 years. But the direction of the wealth's movement has not been downward toward the undeserving poor as so many seem to fear. No, the movement has been upward to the most well-to-do, and the shift has been massive.   And, we see the results every day, as increasing numbers of people come our way seeking assistance. 

Eugene Robinson explains in the following report: 

The study that shows why Occupy Wall Street struck a nerve

By Eugene Robinson, Published: October 27, 2011

The hard-right conservatives who dominate the Republican Party claim to despise the redistribution of wealth, but secretly they love it — as long as the process involves depriving the poor and middle class to benefit the rich, not the other way around.

That is precisely what has been happening, as a jaw-dropping new report by the nonpartisan Congressional Budget Office demonstrates. Three decades of trickle-down economic theory, see-no-evil deregulation and tax-cutting fervor have led to massive redistribution. Another word for what’s been happening might be theft.

The gist of the CBO study, titled “Trends in the Distribution of Household Income Between 1979 and 2007,” is that while we’ve become wealthier overall, these new riches have largely bypassed many Americans and instead flowed mostly to the affluent. Perhaps my memory is faulty, but I don’t remember voting to turn the United States into a nation starkly divided between haves and have-nots. Yet that’s where we’ve been led.

Overall, in inflation-adjusted dollars, average after-tax household income grew by 62 percent during the period under study, according to the CBO. This sounds great — but only until you look a little closer.

For those at the bottom — the one-fifth of households with the lowest incomes — the increase was just 18 percent. For the middle three-fifths, the average increase was 40 percent. Spread over nearly 30 years, these gains are modest, not meteoric.

By contrast, look at the top 1 percent of earners. Their after-tax household income increased by an astonishing 275 percent. For those keeping track, this means it nearly quadrupled. Nice work, if you can get it.

This is not what Republicans want you to think of when you hear the word redistribution.

To read the entire report click here. 

Reactions welcomed, as always.

Wealth gap belies comprehensive "trickle down" benefit

Assessing the wealth holdings of the same families for 23 years (1984-2007) shows that the wealth gap between whites and African Americans increased more than 4 times, from $20,000 in 1984 to $95,000 in 2003. This gap persisted for African Americans and white families in the same income range.

For example, middle-income white households had greater gains in financial assets than high-income African Americans; by 2007, they had accumulated $74,000, whereas the average high-income African American family owned only $18,000. At least 25% of all African American families had no assets to turn to in times of economic hardship.

To read a more detailed report click here.

Institute on Assets and Social Policy

The Heller School for Social Policy and Management

Brandeis University

Jack Kemp, class act

Jack Kemp always impressed me. I guess I just loved his style.

His athletic ability kept fans coming back for more week after week. He played through his pain. He never complained.

Kemp led the way in attempting to push the nation to face its racism, to talk about it and to engage in reconciling actions.

After football, Kemp entered politics as one of the chief proponents, better, salesmen for President Reagan's "supply side" economic theories.

Kemp served as the Secretary of the U. S. Department of Housing and Urban Development under President George H. W. Bush.

Kemp had ideas. He was smart. He was fair. He wanted to include everyone.

Kemp died earlier this month after a battle with cancer. He was 73.

Read a great tribute in the May 11, 2009 issue of Sports Illustrated.

Jack Kemp will be remembered and missed.