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Blog of Mass Destruction

The Rich Don't Create Jobs

By The Reverend Published: April 13, 2012

Very rich entrepreneur, Nick Hanauer, writing in Bloomberg Businessweek....

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 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.

"rich people don't create jobs"....."nor do businesses, large or small". That is exactly right. The writer is a very rich man, but he understands that new job creation does not come from the efforts of "rich people". Again, every day....I heard the mystery-religion chant from conservative and Village went something like this: "we don't want to be raising taxes on our job creators, if we want them to create the new jobs that we need." Every single day. They all say it. And it is entirely wrong. Incorrect.

A capitalistic economy.....regulated, with human greed and chicanery kept in the most effective and productive economic platform man has come up with so far. Just because rich people and businesses are not the players who create jobs in a capitalistic economy does not mean that capitalism, itself, isn't still the preferred method of conducting a national economy. But what it does mean is that the conservative/Republican constant focus on reducing tax rates and regulations on "rich people"....because rich people allegedly create all the not, and has never been, accurate. In fact, it is a lie. It is a mass communication trick. Say it often enough.....people will believe it. Yes, it is spoken virtually every day, by every conservative/Republican....but that does not make it true. No matter how many times it is repeated that rich people and businesses are the job will never be true.

When the millions and millions of Americans, who are not rich, have jobs and enough money to purchase products and services that business people are selling.....then, and only then,...are jobs created. Nothing that a rich business person does.....whether it's opening a new store, outlet, service center or whatever.....can actually create jobs, UNLESS, the multitude of American consumers who are not rich have jobs and enough money to patronize those new establishments.

As a past employer, myself, I had absolutely no reason to hire more people until there was more demand from customers for what I was selling. If there were times when potential customers had fewer jobs and less money,....and there were those matter the tax rate that I paid, I wasn't hiring any new workers.

I know that it seems like I'm belaboring the point here.....but this will be THE POINT of this year's presidential campaign. Obama's plan is to increase tax rates on our richest citizens, partly because the Treasury needs the revenue and partly because of the huge income and wealth disparity gap which exists between the ultra-rich and the rest of us. Romney's plan is to lower tax rates on the rich even more. Sure, Romney promises to lower rates for all average taxpayers as well, however the bulk of the total tax monies rescinded will go to the top 2%, just as they did under Bush's two huge tax cuts. Romney, pitifully, reasons that those rich people he wants to give more tax breaks to......are the nation's "job creators." They're not. American consumers are the nation's job creators.

If our national problem was one of lack of investment capital in the private sector, then it would be true that our country was suffering from a "supply-side" problem. That is not the case. The richest among us are sitting on piles of uninvested capital. They are sitting on that cash instead of hiring new workers because the real "job creators", consumers, are not demanding enough products and services to justify new hiring.

Rich people and flush businesses are actually the "takers" in our society...not the "makers." Consumers, with their collective purchasing power "make" a business successful when those consumers have enough money and/or jobs to keep consumption going. Businesses can only respond to the "makers" by "taking" advantage of consumer demand. It will never happen the other way matter how many times Romney and the Trickle-downers tell you otherwise.

Mr. Hanauer the rich guy, has it right....

We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.



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