Job Creators

The antidote to big lies is clear, eloquent common sense. And there are a lot of big lies out there now (though, alas, scant eloquent common sense). One of the biggest is that we need to tax the rich less so they have extra money to create jobs.

Consider: The rich were taxed upwards of 90% in the 1950s and 1960s, the time of fantastic growth and full employment. And for the past few decades, the rich have been taxed unprecedentedly lightly, yet employment has fallen.

And consider: Business owners never hire because they have extra money lying around. They hire when they need more hands on deck to meet increasing demand. And demand is fueled by a large and prosperous middle class. The middle class - the engine of the economy - spurs job creation.

"We've had it backwards for the last 30 years. Rich people don't create jobs. Jobs are a consequence of an eco-systemic feedback loop between customers and businesses. And when the middle class thrives, businesses grow and hire, and owners profit. That's why taxing the rich to pay for investments that benefit all is such a fantastic idea for the middle class and the rich."

Duh. That's not class warfare talk (the talker - a TED talker, to be specific - is uber capitalist/zillionaire Nick Hanauer). It's not liberal propaganda. It's just simple, eloquent truth.

(Please pass that link around; Hanauer's six minute video is over in a flash, and every word is the essence of pure common sense. I've never seen this explained better. In fact, I'm not sure why I'm typing this or why you're reading this. Go watch his video, instead!)

Another great point from Hanauer:

"Anyone who's ever run a business knows that hiring more people is a course of last resort for capitalists. It's what we do if - and only if - rising consumer demand requires it."

Yep. Payroll is an expense, and expenses are resisted in business. You only hire when demand forces it. And demand doesn't come from rich people. Rich people don't consume in direct proportion to their income disparity. As Hanauer says, he doesn't own 3000 cars.

It's obvious to any Economics 101 student that the brightest future for the 1% involves a thriving middle class and a solid public infrastructure. Those elements are the fuel for any business or investment. Dismantling the safety net is bad for them. Propagating poverty is bad for them. Paying 5-10% more taxes - i.e. returning to the level of taxation in the 1990's when those guys were doing mind-bogglingly well, so we can shore up crumbling infrastructure - would, in the end, be the best possible thing for them. No one proposes a return to 90% rates. Just bring Buffett to parity with his secretary. Isn't that the most reasonable, common sensical proposal ever?

[Note: the 90% tax rate figure is misleading. See Noah's comment, below, for an explanation. However, my point stands: taxes were vastly higher before, when the nation experienced unparalleled growth, and, anyway, no one's advocating for a return to Eisenhower's rabid Communism]