>That's why I can say with confidence that rich people don't create jobs, nor do businesses, large or small.
This argument only considers half of the problem. Yes consumers are needed to create jobs but what is needed to create consumers? Jobs. You can't be a consumer without an income, and for the vast majority of people, you don't have an income unless you have a job.
Therefore for failing to acknowledge this fundamental, very simple and might I say, quite obvious fact, I think it's fair to say Nick Hanauer's reasoning is at best weak, and at worst disingenuous.
It makes one wonder what his motivations really are. Attention seeking contrariness? A desire to ingratiate himself with the 99%?
Yet you just made no argument for why his arguments are weak, while yours are: jobs create consumers and consumers create jobs, but in your equation absurdly rich people and increasing inequality does not seem to be needed...
My very first sentence explains why I think his argument is weak.
I agree, I have stated no position on the absurdly rich and increasing inequality. I think it is unnecessary to stray into this area in order to prove or disprove whether businesses or the wealthy create jobs. Either a business or a wealthy person can or cannot create a job regardless of the taxation laws du jour. He has categorically stated that they cannot. I think this is totally incorrect.
No, he stated that they do not. Businesses don't hire employees they don't need. They can, but if they try it at any appreciable scale relative to their business, they will go out of business.
It's not about what can happen. It's about what does happen. And what does happen, is that employers hire employees when they need them. Not just because they've made money, nor just because they got to keep more of the money they make via changes in taxation.
They could. But they don't. There's decades of data and research on this. It's not really debatable. Tax cuts do not translate into jobs. It's never happened. The increase in wealth of the wealthy does not translate into jobs. It's never happened. Consumer demand and business expansion to meet that demand, does translate into jobs. It always happens.
The question is how, or even whether you should try, to stimulate consumer demand when unemployment is high. (And the follow-on: what problems does that (in)action create)
Ok, let's get back to the basics, because everybody looks like they lost it when they start discussing this
"rich people don't create jobs, nor do businesses, large or small."
Ok, where to start
You can have "a job" essentially in two ways:
- Being self-employed (doctor, lawyer, etc), or create your own company. This is usually the minority of people
- Having a job at a company
So, yes, companies create jobs, next
Big companies create more jobs (per 'unit'). Smaller companies create less jobs (per 'unit') but combined they make more jobs in total.
Companies create an opening because of: increased production (or more customers, in case of services), new line of business. This is ignoring regular turnaround where someone quits to go somewhere else and someone is hired to replace.
Hence, new jobs comes from:
- New products / services
- More people consuming existing products
(we could add loss of efficiency as well)
Now, bigger companies have a much easier time hiring new people. HR is set and knows the drill, they usually can accomodate new people with their existing profits (maybe not a lot, still)
Smaller companies have a much harder time hiring another people. Suppose you are a one man company, and you want to hire someone. You have to be HR (this cuts into your time). You may be not sure if adding this person is going to increase the profits enough to cover for the extra costs, etc
So when you cut taxes to all companies, sure, you're helping the big guys, but also the small guys.
The rich have an easier time dodging regulation or sending their profits to Ireland and back, but not the small guy
"And taxing the rich to make investments that grow the middle class" (from the article)
Yadda yadda yadda. You want to grow the middle class? Reduce taxing on them!
But the government won't do it, because the middle class (still) has the most money available (amount of people x taxes payed by each one) and the least resources to avoid them.
Maybe a more logical extension of where you could go with "only considering half the problem" is that the wealthy often put up the initial capital to create the enterprise that then sells to consumers. Salary earners tend to have a harder time creating enough spare capital to execute against an opportunity even if they see it.
This argument only considers half of the problem. Yes consumers are needed to create jobs but what is needed to create consumers? Jobs. You can't be a consumer without an income, and for the vast majority of people, you don't have an income unless you have a job.
Therefore for failing to acknowledge this fundamental, very simple and might I say, quite obvious fact, I think it's fair to say Nick Hanauer's reasoning is at best weak, and at worst disingenuous.
It makes one wonder what his motivations really are. Attention seeking contrariness? A desire to ingratiate himself with the 99%?