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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
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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
lumberjack_jeff
(33,224 posts)Nuclear Unicorn
(19,497 posts)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.
bongbong
(5,436 posts)Those are Talking Points and don't reflect reality.
Nuclear Unicorn
(19,497 posts)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)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)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)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.
Nuclear Unicorn
(19,497 posts)CTyankee
(63,771 posts)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)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)but that does not account for 100% of all jobs created or even 51% for that matter.
CTyankee
(63,771 posts)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)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)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)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)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)"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)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.
Scuba
(53,475 posts)Initech
(99,914 posts)SomethingFishy
(4,876 posts)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)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!!
BeHereNow
(17,162 posts)bhn
HughBeaumont
(24,461 posts)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!!!
Bozita
(26,955 posts)Stuart G
(38,359 posts)Douglas Carpenter
(20,226 posts)pacalo
(24,721 posts)to the levels they were before Bush crashed the economy.
Laelth
(32,017 posts)-Laelth