Tag Archives: Inequality

We Are the Job Creators

17 May

A lot of what I learned as a political science major in the late 1980s is now obsolete – with a particular interest in Eastern European studies, all of my textbooks became woefully outdated between August and December 1989.  

But among my studies of why Weimar failed and analyses of Milovan Djilas’ New Class, I also recall that the American struggle for independence, the Civil War, and the European upheaval of 1848 were “bourgeois revolutions” and direct or indirect offspring of the Enlightenment.  A phrase that gets thrown about quite frequently in contemporary American politics is “class warfare”, but that’s absolute nonsense. The United States doesn’t have anywhere near the class conflict of, say, the UK. After all, we banned nobility and titles. 

The irony, of course, is that the notion of class struggle being a political struggle is an inherently Marxist concept. So, welcome to Marxism, Republicans!

These bourgeois revolutions generally replaced nobility and power-through-hereditary-entitlement with the rule of law and representative democracy. Some worked, others didn’t.  But in the United States, at least, the post-Civil-War 14th Amendment paved the way for the society we have today. But our national priorities and policies since the early 1980s have uniformly helped the very rich and harmed the middle class and working class. Unions are weaker, your purchasing power is stagnant, your earnings have stayed about the same.  Average Americans’ savings have declined, debt is up, trickle-down is a myth, and wealth has become ever-more concentrated, rather than spread around widely. 

So, as part of its “Ideas Worth Spreading”, the TED series of talks invited Seattle venture capitalist Nick Hanauer to speak on March 1 at the “TED University conference”.  Hanauer’s topic was income inequality, and he argued that it was the middle class, and not wealthy entrepreneurs who are the true “job creators”.  TED, however, won’t release video of the speech. Too political. Too controversial. So, here it is

It is astounding how significantly one idea can shape a society and its policies.  Consider this one.

If taxes on the rich go up, job creation will go down.  

This idea is an article of faith for republicans and seldom challenged by democrats and has shaped much of today’s economic landscape.

But sometimes the ideas that we know to be true are dead wrong. For thousands of years people were sure that earth was at the center of the universe.  It’s not, and an astronomer who still believed that it was, would do some lousy astronomy.  

In the same way, a policy maker who believed that the rich and businesses are “job creators” and therefore should not be taxed, would make equally bad policy.  

I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.

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. 

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