How the 1% Destroys Jobs and the Real Heroes are Everyday People
For three decades, we have been told that “trickle-down” economics that benefit the wealthy is the key to creating jobs. But that's baloney. The evidence shows that ordinary people, not the rich, are the real job creators.
Conservatives like to promote a simplistic view that all you need are capital (cash or goods that produce income) and entrepreneurship in order to create wealth. They maintain that wealth, in turn, spurs rich people to do productive things, like creating jobs, and so the more concentrated wealth is, the more jobs are created. If you tax the rich, they argue, then jobs will be destroyed. Mitt Romney frequently echoes this line of thought by promoting economic programs that would give enormous tax breaks to the wealthiest 1% and concentrate wealth in their hands. Romney, who paid 13.9% in taxes in 2010 and likes to tout himself as a job creator, has just announced a plan that calls for preserving the Bush tax cuts for the wealthy, lowering the corporate tax rate, and repealing the estate tax.
Turns out, this 'trickle-down' mythology it is horribly wrong, and the 99 percent has paid for it. There’s a reason why the Wall Street Journal acknowledged that George W. Bush, the last trickle-down president, had the worst job creation record in U.S. history. So before we consider having another trickle-downer in the White House, let’s talk about the failure of this idea and why if you want to see a real job creator, you should look in the mirror.
Who Really Creates Wealth and Jobs?
Let’s start with the first contention – that capital and entrepreneurship are all you need to create wealth. At best, this is a half or quarter truth. Capital and entrepreneurship are certainly factors in the creation of goods and services in our economy, along with labor, resources, technology and social capital, among others. But they are by no means the most important factors. The most important factor in the whole list is labor – the human beings who create products or offer services and are paid in wages.
If you really want to see a wealth creator, just look at the grocer, the nurse, the software developer, the accountant, and the civil engineer. They are all creators of wealth. Chances are, you are a wealth creator.
And remember, creating goods and services is just half the story in producing wealth. Right now, businesses are far less worried about a lack of cash than a lack of confidence that consumer demand will pick up in the future. Unless there is consumer demand, there is no production and no wealth at all. No one is going to make a new MP3 player unless people want to buy it and have the money to make purchases. In this sense, consumers are job creators, too.
As Nick Hanauer, founder of Second Avenue Partners, recently told Bloomberg:
“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 the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.”
In other words, job creation is related to demand. When regular people have spending power, they demand products and services, which leads to more jobs for others to make the things they want.
Does Making the Rich Richer Create Jobs?