This is excellent. It’s from a few months back but if you missed it, it’s worth the listen. Nick Hanauer is a self-made millionaire who makes the argument that “in a true capitalist economy, the true job creators are middle class consumers.”
Hanauer’s argument is based on the premise that when the tax burden resides at the top of the income ladder, then the middle class is in a position to consume thereby “starting the positive feedback loop of job creation again.”
Take a listen.
Hanauer expounds on his ideas in an Atlantic piece.
Capitalists are idea creators, not job creators.
Every business, from the mundane (“How do you make the chip taste more like BBQ?”) to the arcane (“How do we turn photons into electrons?”), is based on an idea about how to solve a problem. The process of converting great ideas into products that effectively solve fast-changing human needs is what creates a business. The essence of every business is both an idea for a product that meets an important human need and the ability to make that product efficiently in order to create profit. …
If capitalists create ideas that produce social and economic value, then it is obvious why it makes so little sense to pour more money into the already wealthy and successful. Even the best of us have only a few ideas. Steve Jobs, arguably the greatest entrepreneur of our generation, had only a handful of truly brilliant ideas. Most billionaires, it could be argued, have only one. It would be far better for our country to enable every citizen to participate in our capitalist economy by ensuring that they have the requisite education and access to capital and training to convert those ideas into products that solve the world’s problems.
Of course, the kind of problems we choose to solve is important. Finding clever ways of securitizing imaginary assets may not create a lot of social utility. Finding cheap ways of converting the sun’s rays into electricity unquestionably does.
Great success should be celebrated, but not institutionalized. When we tax working Americans at a higher rate than billionaires, it is bad for business. When we tax the small business more than our largest corporations, it is similarly bad for business. When we give tax breaks to the wealthiest while excluding those in the middle and the bottom, we slow down our economy by slowing down the rate of idea creation, because so many are excluded from the process of solving our nation’s problems.
UPDATE
Here’s a timely piece from Steven Pearlstein.
I am a job creator: A manifesto for the entitled.
I am a corporate chief executive.
I am a business owner.
I am a private-equity fund manager.
I am the misunderstood superhero of American capitalism, single-handedly creating wealth and prosperity despite all the obstacles put in my way by employees, government and the media.
I am a job creator and I am entitled.
I am entitled to complain about the economy even when my stock price, my portfolio and my profits are at record levels.
I am entitled to a healthy and well-educated workforce, a modern and efficient transportation system and protection for my person and property, just as I am entitled to demonize the government workers who provide them.
I am entitled to complain bitterly about taxes that are always too high, even when they are at record lows.
I am entitled to a judicial system that efficiently enforces contracts and legal obligations on customers, suppliers and employees but does not afford them the same right in return.
I am entitled to complain about the poor quality of service provided by government agencies even as I leave my own customers on hold for 35 minutes while repeatedly telling them how important their call is.
I am entitled to a compensation package that is above average for my company’s size and industry, reflecting the company’s aspirations if not its performance.
I am entitled to have the company pay for breakfasts and lunches, a luxury car and private jet travel, my country club dues and home security systems, box seats to all major sporting events, a pension equal to my current salary and a full package of insurance — life, health, dental, disability and long-term care — through retirement.
I am entitled to have my earned income taxed as capital gains and my investment income taxed at the lowest rate anywhere in the world — or not at all.
I am entitled to inside information and favorable investment opportunities not available to ordinary investors. I am entitled to brag about my investment returns.
I am entitled to pass on my accumulated wealth tax-free to heirs, who in turn, are entitled to claim that they earned everything they have.
I am entitled to use unlimited amounts of my own or company funds to buy elections without disclosing such expenditures to shareholders or the public.
I am entitled to use company funds to burnish my own charitable reputation.
I am entitled to provide political support to radical, uncompromising politicians and then complain about how dysfunctional Washington has become.
Although I have no clue how government works, I am entitled to be consulted on public policy by politicians and bureaucrats who have no clue about how business works.
I am entitled to publicly criticize the president and members of Congress, who are not entitled to criticize me.
I am entitled to fire any worker who tries to organize a union. I am entitled to break any existing union by moving, or threatening to move, operations to a union-hostile environment.
I am entitled to a duty of care and loyalty from employees and investors who are owed no such duty in return.
I am entitled to operate my business free of all government regulations other than those written or approved by my industry.
I am entitled to load companies up with debt in order to pay myself and investors big dividends — and then blame any bankruptcy on over-compensated workers.
I am entitled to contracts, subsidies, tax breaks, loans and even bailouts from government, even as I complain about job-killing government budget deficits.
I am entitled to federal entitlement reform.
I am entitled to take credit for all the jobs I create while ignoring any jobs I destroy.
I am entitled to claim credit for all the profits made during a booming economy while blaming losses or setbacks on adverse market or economic conditions.
I am entitled to deny knowledge or responsibility for any controversial decisions made after my departure from the company, even while profiting from such decisions if they enhance shareholder value.
I am entitled to all the rights and privileges of running an American company, but owe no loyalty to American workers or taxpayers.
I am entitled to confidential information about my employees and customers while refusing even to list the company’s phone number on its Web site.
I am entitled to be treated with deference and respect by investors I mislead, customers I bamboozle, directors I manipulate and employees I view as expendable.
I am entitled to be lionized in the media without answering any questions from reporters.
I am entitled to the VIP entrance.
I am entitled to everything I have and more that I still deserve.
(h/t: David Frum)
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There’s no doubt that there are some wealthy people who create jobs, but the notion of the rich man as entrepreneur and job “creator” is something out of our past, not something in our present. John Astor made his money from the fur trade, meaning that he had to have hundreds of people out in the wilderness gathering pelts; Carnegie was steel; Rockefeller was oil, and they all had to employ hundreds or thousands to support their enterprises.
That all changed with the rise of Goldman Sachs and the financial “industry”. Our economy went from creating useful goods and services to shuffling paper to create the illusion of wealth. Goldman Sachs was instrumental in creating the conditions that lead to the crash of 1929, and that firm plagues us to this day (if you doubt me, read Kenneth Galbraith’s The Great Crash).
Some entrepreneurs have a great idea whose time has come (e.g. Steve Jobs, Henry Ford); others have ideas that go nowhere and fail; others simply want to create a business to make money, look for a niche and fill it (e.g. Edison) and there are others who stumble onto a Great Idea (Charles Goodyear, Bette Nesmith and Art Fry). But people who shuffle papers, re-invest and use mathematical tricks to artificially inflate their dollar worth do not add to the economy; they subtract from it. They sequester their funds in tax shelters and offshore accounts (as Romney has done) where that wealth serves no useful purpose other than acting as counters in a game. It might as well be Monopoly™ money, and , in a way, Monopoly™ is more and more a metaphor for the American way of doing things – politics, business, international relations: get the upper hand and squeeze your opponents into bankruptcy, submission or oblivion.
I like this Hanauer guy. He simply confirmed what I have written in the past. The few (1%) have gotten rich because of the purchases of the many (99%) .
So we need to ask many questions: How will the rich few make their money when the many ( middles class ) are unemployed and less well off ? When will we reach social justice when the many are not on the same playing field as the few ? When will grotesque stock options or ridiculous salaries and bonuses be reinvested in company pension plans so the middle class have a retirement that will allow the purchase of big items ? So many more questions on equality such as overseas bank accounts,outsourcing,fair trade etc
The baby boomers are feeling the pinch today and if this generation does not turn things around,then the next generation of retirees ( our children) will be in a spiral to poverty that the US government will never be able to help and that the rich will see their wealth decline because of it.
What has always confused me is the large number of companies that support Republicans, all the while making their money with middle class purchasing power. They don’t seem to get the fact that their preferred policies actually do away with the company’s customer base.
The R policies might increase the amount they don’t have to pay for taxes, but the incoming money comes to an end. If you own a huge pizza chain – and no one can afford pizzas but the rich (who don’t eat that much pizza) – you start losing money. You then have to down-size to try and make up for it – and raise the price on the pizza – which results in even fewer people who can afford it. You then have to keep downsizing. You can’t find a buyer for a business that loses money – so you can’t even get rid of it.
Henry Ford understood this.
Check out the post update – The job creator manifesto.
My husband and myself are small business owners. Working 60 hours a week for 25 years. For the life of me I can’t understand how so many people are sucked into the GOP bullshit fantasy. Right now corporations are SITTING on more capital then ever before so why doesn’t Bain capital, apple, Starbucks or Walmart open up stores in Haitia? The GOP always says the the job creators need to pay less in taxes to expand their business and create jobs, so why aren’t they doing it now? Because there is no demand, no customers. Up until 2008 I paid more in taxes that many people make in a year, and that was fine because it meant that we were making money. If the government lowered my taxes to zero, it would not tempt me to expand or hire, without customers with money in the wallets to spend on my products, why would I give someone a job? So I could watch him stand there doing nothing?
It is the middle class that are the engine of our economy.
Had we been able to invest in our infrasture, building high speed rail across the US, building grids to bring wind and solar to homes, we would be in good shape.
The GOP, in their quest for political power to do the bidding for the 1% have lost their minds.
Sydney, if you and your husband are running a business after 25 years and still working 60 hours, STOP VOTING DEMOCRAT!
I think you are really just a Obama bum kisser masquerading as a business owner. No business owner wants to “invest” in high speed rail, putting useless solar into homes and wasting money on expensive useless wind power. Business owners want lower taxes so consumers have money to spend, and for businesses to expand. That’s what drives the economy.
But, clearly, not in your world.
@Silver Streake
Clearly you’re an idiot and a Foxbot. Taxes are lower now than they’ve been in the last 60 years. Time to get your head out of your ass and understand that high speed rail and renewable energy are the way to the future. Not that you would ever understand. Word of advice for you. STOP WATCHING FOX!
Silver….your an ass. You only know the propaganda that is spoon fed to you my rightwing media. What’s wrong with hard work? I thought that you nutjobs LIKED THAT. I have no debt, bought my house and autos cash and put three beautiful daughters through collage.
But anyhoo…tell me something Streake, right now taxes are the lowest they have ever been, the big corps are sitting on trillions in capital so what’s the problem. The trickle should of been sprinkling like piss on the heads of the middle class?
I would love to see you get what you wish for, a republican ideology government. And when you are working for 3.00/hr and living under one of our crumbling bridges with your hungry, uneducated children as you listen to your republican politicians boast that the USA is the wealthiest country in the world, the look on your face when you realize that you were played for a dupe……would be priceless.
Henry Ford knew that almost a hundred years ago, that’s why he paid his workers enough so they could afford to buy his cars. I’ve always thought that was common knowledge.
@merl – that wa what I was referring to in the comment above.
@Sydney – no, people like Silver Streake will never get it. When they are living under that bridge, due to failed R policies, they will just be told that the fault lies with the gays or abortion or immigrants – and they will believe it.
Mark Twain explained that it is easier to fool people than convince them they were fooled.