Sorry Folks, Rich People Don't Actually 'Create Jobs'
By Henry Blodget, Slate.com
This post originally appeared in Business Insider.
As America struggles with high unemployment and record inequality, everyone is offering competing solutions to the problem. In this war of words (and classes), one thing has been repeated so often that many people now regard it as fact. "Rich people create jobs." Specifically, by starting and directing America's companies, rich entrepreneurs and investors create the jobs that sustain everyone else. This statement is usually invoked to justify cutting taxes on entrepreneurs and investors. If only we reduce those taxes and regulations, the story goes, entrepreneurs and investors can be incented to build more companies and create more jobs.
This argument ignores the fact that taxes on entrepreneurs and investors are already historically low, even after this year's modest increases. And it ignores the assertions of many investors and entrepreneurs (like me) that they would work just as hard to build companies even if taxes were higher. But, more importantly, this argument perpetuates a myth that some well-off Americans use to justify today's record inequality—the idea that rich people create jobs.
Entrepreneurs and investors like me actually don't create the jobs—not sustainable ones, anyway. Yes, we can create jobs temporarily, by starting companies and funding losses for a while. And, yes, we are a necessary part of the economy's job-creation engine. But to suggest that we alone are responsible for the jobs that sustain the other 300 million Americans is the height of self-importance and delusion.
So, if rich people do not create the jobs, what does? A healthy economic ecosystem—one in which most participants (the middle class) have plenty of money to spend. Over the last couple of years, a rich investor and entrepreneur named Nick Hanauer has annoyed all manner of rich investors and entrepreneurs by explaining this in detail. Hanauer was the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion. What creates a company's jobs, Hanauer explains, is a healthy economic ecosystem surrounding the company, which starts with the company's customers.
(More here.)
This post originally appeared in Business Insider.
As America struggles with high unemployment and record inequality, everyone is offering competing solutions to the problem. In this war of words (and classes), one thing has been repeated so often that many people now regard it as fact. "Rich people create jobs." Specifically, by starting and directing America's companies, rich entrepreneurs and investors create the jobs that sustain everyone else. This statement is usually invoked to justify cutting taxes on entrepreneurs and investors. If only we reduce those taxes and regulations, the story goes, entrepreneurs and investors can be incented to build more companies and create more jobs.
This argument ignores the fact that taxes on entrepreneurs and investors are already historically low, even after this year's modest increases. And it ignores the assertions of many investors and entrepreneurs (like me) that they would work just as hard to build companies even if taxes were higher. But, more importantly, this argument perpetuates a myth that some well-off Americans use to justify today's record inequality—the idea that rich people create jobs.
Entrepreneurs and investors like me actually don't create the jobs—not sustainable ones, anyway. Yes, we can create jobs temporarily, by starting companies and funding losses for a while. And, yes, we are a necessary part of the economy's job-creation engine. But to suggest that we alone are responsible for the jobs that sustain the other 300 million Americans is the height of self-importance and delusion.
So, if rich people do not create the jobs, what does? A healthy economic ecosystem—one in which most participants (the middle class) have plenty of money to spend. Over the last couple of years, a rich investor and entrepreneur named Nick Hanauer has annoyed all manner of rich investors and entrepreneurs by explaining this in detail. Hanauer was the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion. What creates a company's jobs, Hanauer explains, is a healthy economic ecosystem surrounding the company, which starts with the company's customers.
(More here.)
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1 Comments:
neither do governments.
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