Do the Rich Create Jobs

Do the Rich Create Jobs

Sorry, Republicans, but rich people are not "job creators." They never have been and never will be. No one ever invests in anything to create jobs. Employing people is a by-product of capitalism.

Those are the views of the venture capitalist Nick Hanauer, a multimillionaire who was recently invited to speak at aTED conference. The conferences are well-known gatherings featuring talks on a variety of topics and can be viewed online.

Update: Initially, Hanauer's speech was not posted online, which spurred a controversy that TED reacted toThursday. The speech appeared on YouTube Thursday, and you can see it here.

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.


Hanauer added this little zinger as well: "So when businesspeople take credit for creating jobs, it's a little like squirrels taking credit for creating evolution. In fact, it's the other way around." 

The views of Hanauer, who made his fortune as an early investor in Amazon (AMZN 0.00%), are not that radical.

The Republican focus on cutting taxes for millionaires and billionaires is all wrong. For one thing, wealthy people -- ones with smart investment advisers -- know to put a good chunk of money in tax-free investments such as municipal bonds. Some also minimize their tax burden by putting their money in off-shore tax havens. If those people paid less in taxes, odds are that the windfall would wind up in those accounts. Few, if any, jobs would be created.

Another flaw in the Republican argument is the idea that the rich have an onerous tax burden. As The New York Times noted earlier this year, the tax burden paid by the wealthiest Americans has fallen significantly over the past few decades. Warren Buffett, among others, has made similar points.
 
"Between 1985 and 2008, the wealthiest 400 Americans saw the percentage of their income paid in federal income taxes drop from 29% to 18%," the paper reported, citing data from the Internal Revenue Service.

Income inequality should become the central issue of the presidential campaign. Heck, it should be the most important issue of the 21st century. I am not holding my breath for that to happen.

After deeming Hanauer's talk too political, perhaps TED organizers should change the conference motto from "Ideas worth spreading" to "Guardians of conventional wisdom."

TED curator Chris Anderson wrote a long response to the controversy Thursday, saying essentially that the speech just wasn't very good. The audience at TED that heard it gave it mediocre ratings, Anderson said. "Our policy is to post only talks that are truly special," he added. "And we try to steer clear of talks that are bound to descend into the same dismal partisan head-butting people can find every day elsewhere in the media."


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Phone: 201-669-7520
Dated: May 18th 2012
Views: 1,129
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