Rich people dont create jobs.

Discussion in 'Politics' started by Free Thinker, May 17, 2012.

  1. (the republican meme is that)by even considering raising taxes on "the 1%," we are considering destroying the very mechanism that makes our economy the strongest and biggest in the world: The incentive for entrepreneurs nd investors to build companies in the hope of getting rich and, in the process, creating millions of jobs.

    Now, there have long been many problems with this argument starting with

    1.Taxes on rich people (capital gains and income) are, relative to history, low, so raising them would only begin to bring them back in line with prior prosperous periods, and
    2.Dozens of rich entrepreneurs have already gone on record confirming that a modest hike in capital gains and income taxes would not have the slightest impact on their desire to create companies and jobs, given that tax rates are historically low.
    So this argument, which many people regard as fact, is already flawed.

    But now a super-rich and super-successful American has explained the most important reason the theory is absurd, while calling for higher taxes on himself and people like him.
    The most important reason the theory that "rich people create the jobs" is absurd, argues Nick Hanauer, the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion, is that rich people do not create jobs, even if they found and build companies that eventually employ thousands of people.

    What creates the jobs, Hanauer astutely observes, is a healthy economic ecosystem surrounding the company, which starts with the company's customers.
    The company's customers buy the company's products, which, in turn, creates the need for the employees to produce, sell, and service those products. If those customers go broke, the demand for the company's products will collapse. And the jobs will disappear, regardless of what the entrepreneur does.
  2. Max E.

    Max E.

    Yep, all this time we have been dead wrong, its really the people living on foodstamps and welfare who are the job creators, what we should do is double the tax on the rich, so we can double entitlement spending, then we will see an economic boom, that will make the tech bubble look like a blip in the radar.....
  3. Ricter


    Necessity created the first job, continues to create them, and will create them so long as Man wishes to live.

    Now, which came first, the laborer or the tool?
  4. piezoe


    This issue has been studies and researched extensively by the Kauffman Foundation, should anyone be interested in facts as opposed to political rhetoric.
  5. Ricter


    Did you have a link to a specific page in there? I need the executive summary!
  6. G-Unit


    Actually that could be a very good point. Think about it. The poor are poor for a reason. They're irresponsible with their spending. The numerous poor contributes to the economy by spending. Look at Octomom who spends $200 hair job but is on welfare. However, I don't advise that welfare programs are the way to go. You generalize too much about those programs. Not everyone likes them or wants to stay on them. That money spent does drive the economy. My take is that demand drives the economy not tax breaks.

    Look at the high taxes in the 1950's. You'd be shocked what they were then. What about the high taxes under Clinton?

    History shows that low taxes does not equal jobs. If you even look at Reagan's tax cutting. The job market didn't come back until 6 years into his presidency in 1986. We've been under Obama for 3 years. Recoveries take time. Also Reagan raised taxes in 1987 to deal with the debts raised by the earlier lower taxes.
  7. The theory presupposes that if taxes were higher the government would do something with those funds that would improve the lives of the middle class. There's very little to indicate that would happen.

    California is a great example. In the 1960s, total per-capita California state taxes as a percentage of income were about the same as they are now. In the 1960s California had great schools, great roads, and very little debt. Fifty years later, California has terrible schools, terrible roads and the second worst debt rating in the country. Per capita taxes as a percentage of income are the same, yet the state is now an economic train wreck. The reason --decades of bad management.

    Any organization is only as good as it's management. The management of this country has been in a state of decline for the past 50 years. Raising taxes without having great managers won't solve the problem.
  8. Taxation is not the issue, Onerous taxation is.
  9. piezoe


    Immediately below is a link to a summary address by the head of the Kauffman Foundation. Some interesting data re where the most jobs are created is included. The report notes that job creation by existing large businesses is small compared to job creation by new businesses, but not necessarily small new businesses.

    Here is, to me, a very interesting excerpt:

    " One rule, which is a perennial issue we raise at the
    Foundation, is to reform U.S. immigration laws so that
    more high-skilled immigrants can launch businesses in the
    United States. Kauffman research shows that immigrants are
    disproportionately likely to start a business—indeed, roughly
    25 percent of successful high-tech startups over the last
    decade were founded or co-founded by immigrants (Figure
    4). Highly educated immigrants want to come to the United
    States because ours is a nation in which science can flourish
    and ingenuity can be rewarded. But today the world’s budding
    entrepreneurs have more options when choosing a home—as
    India, China, Brazil, and others catch up to the United States in
    terms of available capital, labor, and opportunity.
    Immigration restrictions that limit the number of highly
    skilled people permitted to enter the United States to work or
    start a business serve no purpose other than to stifle growth."

    And here is an interesting opinion excerpted from an address made by Seattle venture capitalist Nick Hanauer: (not associated with the Kauffman Foundation)

    "...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 a "circle of life" like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary middle-class consumer is far more of a job creator than a capitalist like me."

    for the entire address see:

    I liked Hanauer's remarks because they reinforce what I have been saying all along in these forums, and that is that the U.S. must find a way to regenerate its middle class. The current trend of declining real wages in the middle class must be reversed. Then you will see the kind of job growth this country needs.

    The idiotic mantra that the wealthy are responsible for job creation is not only tiresome, but it is flat out out wrong. In fact, it would appear that the wealthy are rather immaterial to the issue of job creation.
  10. jem


    customers create jobs... tell that bill gates and zuckerberg. Most ridiculous statement I read this week and we see a lot of b.s. from the left. Creating the product or service which customers want or need create the jobs. Did the customers demand pong, did the customers demand apple. Did the customers demand Itunes. I pads. Get off the leftist b.s. and look at reality. Taxes kill investment.

    If the creation of the product or service requires investment of time or money... you can damn well be sure the investors will be looking at their return after taxes.

    That is how investors work. Go out and try to raise money for a worthy venture. Tell them they will have a zero percent return after taxes. Tell them they will have a 20 percent return after taxes.

    The problem with leftists, leftist academics and community organizers, is they have no clue how the real world works.
    #10     May 19, 2012