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kpete

(71,900 posts)
Thu Dec 15, 2011, 11:48 AM Dec 2011

Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs

Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs


It's time we stopped mouthing the fiction that "rich people create the jobs."

Rich people don't create the jobs.

Our economy creates jobs.

We're all in this together. And until we return to more reasonable tax policies that help the 99% instead of just the 1%, our economy is going to go nowhere.

http://www.businessweek.com/news/2011-12-07/raise-taxes-on-rich-to-reward-true-job-creators-nick-hanauer.html


.......................

The most important reason the theory that "rich people create the jobs" is absurd, argues Nick Hanauer, the founder of online advertising company aQuantive, which Microsoft bought for $6.4 billion, is that rich people do not create jobs, even if they found and build companies that eventually employ thousands of people.What creates the jobs, Hanauer astutely observes, is a healthy economic ecosystem surrounding the company, which starts with the company's customers.

The company's customers buy the company's products, which, in turn, creates the need for the employees to produce, sell, and service those products. If those customers go broke, the demand for the company's products will collapse. And the jobs will disappear, regardless of what the entrepreneur does.

Now, of course entrepreneurs are an important part of the company-creation process. And so are investors, who risk capital in the hope of earning returns. But, ultimately, whether a new company continues growing and creates self-sustaining jobs is a function of customers' ability and willingness to pay for the company's products, not the entrepreneur or the investor capital. Suggesting that "rich entrepreneurs and investors" create the jobs, therefore, Hanauer observes, is like suggesting that squirrels create evolution.

the rest:
http://finance.yahoo.com/blogs/daily-ticker/finally-rich-american-destroys-fiction-rich-people-create-152949393.html

29 replies = new reply since forum marked as read
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Finally, A Rich American Destroys The Fiction That Rich People Create The Jobs (Original Post) kpete Dec 2011 OP
Rich people get it, but the fiction gets them better treatment from government. n/t lumberjack_jeff Dec 2011 #1
Who fronts the money? Nuclear Unicorn Dec 2011 #2
Nope bongbong Dec 2011 #7
So where does the start-up money come from? Nuclear Unicorn Dec 2011 #9
More talking points from you bongbong Dec 2011 #11
Not every business begins as a small start-up Nuclear Unicorn Dec 2011 #13
Many times a manufacturer will partner with one of their bigger customers to secure financing Ikonoklast Dec 2011 #19
Don't say "venture capitalist" too loud. You might end-up on "the list" n/t Nuclear Unicorn Dec 2011 #21
There are good venture capitalists. Ned Lamont's wife, Annie, is one. CTyankee Dec 2011 #26
Surely you know that government itself has "created" a ton of jobs in the private sector. CTyankee Dec 2011 #12
I would not deny any of that Nuclear Unicorn Dec 2011 #14
Perhaps not directly. CTyankee Dec 2011 #16
Again, no dispute Nuclear Unicorn Dec 2011 #20
Of course. CTyankee Dec 2011 #23
I'd rather not. My opinion of Hollywood is rather low. Nuclear Unicorn Dec 2011 #24
Yeah, it's a love/hate thing with me, too. My daughter, son in law and grandson live in CTyankee Dec 2011 #25
You say it yourself in your description - DEMAND creates jobs. fasttense Dec 2011 #27
No US Media will Highlight this krucial Dec 2011 #3
Rich people aren't the cause of a robust economy, they're the result of a robust economy. n/t Scuba Dec 2011 #4
It's not job creating when companies are hoarding trillions. Initech Dec 2011 #5
Yup, that's why we need to increase taxes on corporations and the rich... SomethingFishy Dec 2011 #10
We need to tax the shit out of their precious profits. Initech Dec 2011 #22
True, this. n/t BeHereNow Dec 2011 #17
There are some real DOLTS commenting at that site. HughBeaumont Dec 2011 #6
Product/service demand from folks with $$$ in their pockets creates jobs Bozita Dec 2011 #8
Outstanding, thanks for posting..nt Stuart G Dec 2011 #15
excellent article Douglas Carpenter Dec 2011 #18
This article provides one of the best arguments I've seen for restoring the 1%'s tax rates pacalo Dec 2011 #28
k&r for the truth. n/t Laelth Dec 2011 #29

Nuclear Unicorn

(19,497 posts)
2. Who fronts the money?
Thu Dec 15, 2011, 11:56 AM
Dec 2011

You can be all fired-up to buy a thousand widgets but unless there is a widget factory producing widgets you don't have anything to buy. Someone has to get the building, buy the machines, utilities, payroll, benefits, OSHA-type stuff, marketing, etc etc etc. The initial round of consumer purchasing won't pay all that back. In fact, generally speaking, the return on investment is years if not decades away. Someone(s) has to have the money up front until sales become self-sustaining.

Nuclear Unicorn

(19,497 posts)
9. So where does the start-up money come from?
Thu Dec 15, 2011, 03:11 PM
Dec 2011

Products can't be manufactured in a vacuum and consumers cannot provide money until after a product has been manufactured, distributed and sold.

I'm curious to hear the competing theory.

 

bongbong

(5,436 posts)
11. More talking points from you
Thu Dec 15, 2011, 03:19 PM
Dec 2011

If there is demand, it ramps up. Small businesses take the first step. They can produce more products with their existing equipment. They get more income, hire more workers. etc

I'm glad to see non-Democrats are reading DU now.

Nuclear Unicorn

(19,497 posts)
13. Not every business begins as a small start-up
Thu Dec 15, 2011, 03:37 PM
Dec 2011

The fact of the matter is that it takes quite a bit of logistical overhead to start anything. Even small businesses have to pay for rent, utilities, vendors etc. Moreso if they pay employee wages. How does someone start small with a 300-room hotel or a 24,000 sq foot production floor?

My boss helps people build factories and other businesses. He helps with site scouting, master planning, regulatory compliance, etc. All the while he has to make sure the slice of the very finite investment pie consumed leaves enough left over for materials, labor, contingencies and whatnot. It is what he does for a living and I get to see the detail of everything his clients have to contend with. Frankly, it's staggering.

And this nonsense of "OMG agreeing with the RW!" is silly. The RW is against corporate bailouts as anathema to free-market principles. Does this suggest I should support corporate bailouts just because some on the RW oppose them?

Ikonoklast

(23,973 posts)
19. Many times a manufacturer will partner with one of their bigger customers to secure financing
Thu Dec 15, 2011, 03:51 PM
Dec 2011

that wouldn't be available to them otherwise.

The customer is selling the manufacuters products and needs more of them produced, they help finance the expansion, everyone wins.

And there are many venture capitalists that will front money to a good business model for a piece of the pie.

CTyankee

(63,771 posts)
26. There are good venture capitalists. Ned Lamont's wife, Annie, is one.
Thu Dec 15, 2011, 05:36 PM
Dec 2011

She, unlike Ned, came from a humble background and has done very well. It's possible to be good at making money without closing down factories and laying off a slew of workers...

CTyankee

(63,771 posts)
12. Surely you know that government itself has "created" a ton of jobs in the private sector.
Thu Dec 15, 2011, 03:20 PM
Dec 2011

The R & D in government entities such as the Dept. of Defense and NASA has provided the basic groundwork needed so that the entrepreneur can develop a technology further and politicians can and have helped to see to it that the groundwork was done and made available. Steve Jobs didn't do that part but he took it from there. He was no doubt a creative genius but it wasn't him from square one creating his products...

Nuclear Unicorn

(19,497 posts)
14. I would not deny any of that
Thu Dec 15, 2011, 03:38 PM
Dec 2011

but that does not account for 100% of all jobs created or even 51% for that matter.

CTyankee

(63,771 posts)
16. Perhaps not directly.
Thu Dec 15, 2011, 03:44 PM
Dec 2011

However, the ripple effect cannot be underestimated. The government created jobs by providing the GI Bill so that service people who could never have afforded a college education were able to get one and it is doing so again today in our modern volunteer forces. Homes were built and sold to people benefitting from VA loans. Medicine has developed dramatically due to the unfortunate circumstance of battlefield medical development. I could go on and on but you have to give credit where credit is due.

Nuclear Unicorn

(19,497 posts)
20. Again, no dispute
Thu Dec 15, 2011, 03:51 PM
Dec 2011

But if you want to open a mid-sized hotel amongst you and a dozen of your closest private investors y'all better come packin' some cash. NASA and the GI Bill, as awesome as they may be, won't help you choose/finance between building water lines to the city or building a well and cistern system.

CTyankee

(63,771 posts)
23. Of course.
Thu Dec 15, 2011, 04:35 PM
Dec 2011

I am not arguing that private investment doesn't have a role. Just look at the film industry in this country...

Nuclear Unicorn

(19,497 posts)
24. I'd rather not. My opinion of Hollywood is rather low.
Thu Dec 15, 2011, 04:39 PM
Dec 2011


Still, they're free to do what they do. I like movies and can appreciate the art for art's sake but if ever there was a group of self-important 1%ers who take more than they give materially while leaving harm in their wake it would be Hollywood.

CTyankee

(63,771 posts)
25. Yeah, it's a love/hate thing with me, too. My daughter, son in law and grandson live in
Thu Dec 15, 2011, 05:23 PM
Dec 2011

Burbank and many of their friends are in film/tv. I happen to love L.A. because I have met (through them) so many creative people, many of them artisans who help "create the magic" and others who are the artists themselves (my son in law is a musician). So I can't really say it's a horrible place altho it does make a lot of the trashiest culture out there. Some terrific museums, tho...

 

fasttense

(17,301 posts)
27. You say it yourself in your description - DEMAND creates jobs.
Fri Dec 16, 2011, 08:07 AM
Dec 2011

"You can be all fired-up to buy" - An acurate description of demand.

Without first having a demand for a widget the guy who wants to sell the widget is out of luck.

To have that demand ready and waiting for the widget is what a robust economy does.

Besides, the way I've seen new businesses start, isn't anything like you describe.

First a person notices there is a demand for something unavailable. He or she starts making a few. They sell out, they make more, they sell out again. They hire a few people and make even more. Slowly they are reinvesting their profit in the business. When the business is big enough to provide a good salary for the owner, a large corporation moves in, buys it up and moves it to China.



I am a spell check addict. All misspellings are a symptom of my withdrawl.

 

krucial

(206 posts)
3. No US Media will Highlight this
Thu Dec 15, 2011, 12:00 PM
Dec 2011

The sad truth is that no US media will higlight these fact.
Truth and fact does not resonate with most of our Media,and those who tries to expose the truth in anyway,gets canned and banished from our controlled media stage.

SomethingFishy

(4,876 posts)
10. Yup, that's why we need to increase taxes on corporations and the rich...
Thu Dec 15, 2011, 03:18 PM
Dec 2011

With such a low tax rate there is no incentive to re-invest money.

Basically it's time to regulate Greed.

Initech

(99,914 posts)
22. We need to tax the shit out of their precious profits.
Thu Dec 15, 2011, 04:09 PM
Dec 2011

At what point do we just say enough? We're hurting for jobs and can't pay for bills and healthcare... These are making trillions while their CEOs get obscene raises and annual bonuses and stock options. For what? Laying off workers, outsourcing jobs to India and China? Slashing out our pay and benefits for next to nothing?? Fuck them!!

HughBeaumont

(24,461 posts)
6. There are some real DOLTS commenting at that site.
Thu Dec 15, 2011, 01:51 PM
Dec 2011

These are what we call "The Unreachables".

The subject of their myth (you know, the person who's actually SUCCESSFUL in business rather than the Cheeto-eating, basement-dwelling card-carrying member of the 101st Chairborne Division or the corporate funded jock-o-rama he takes his marching orders from) breaks the myth in two, yet they're still clinging to their Kool-Aid IVs and write him off as a "moron" or an "idiot". Absolutely amazing and astounding.

Logically explain to me how Crapitalism survives without demand because wages have been suppressed for 30 years (as he dutifully explains in the article). Logically explain to me how this country functions without revenue from working. Logically explain to me how things are built from the top down. Logically explain to me why we should give Supply Side many more chances when it's proven to be a collossal failure for the past 30 years. LOGICALLY EXPLAIN THIS TO ME, IDIOTS!!!

pacalo

(24,721 posts)
28. This article provides one of the best arguments I've seen for restoring the 1%'s tax rates
Fri Dec 16, 2011, 09:49 AM
Dec 2011

to the levels they were before Bush crashed the economy.

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