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The rich are NOT the job creators

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    Reference: Raise Taxes on Rich to Reward True Job Creators: Nick Hanauer, Bloomberg Businessweek December 1, 2011

    Nick Hanauer is a billionaire, an entrepreneur and venture capitalist. He founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. in 2007 for $6.4 billion.

    Quoting Hanauer:

    "Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate."

    "That’s why 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."

    "That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer. And that’s what has been happening in the U.S. for the last 30 years."

    "Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich."

    So there you have it...the words of a self made billionaire that understands business, markets and consumers.  Read his entire article at the above link.  It says what many of us have been preaching on this website for a long time, but Hanauer adds credibility to our arguments.  I just wish he would be invited on Fox News instead of MSNBC Dylan Ratigan show where he is preaching to the choir.

    I'm going to order his book as well on Amazon: The Gardens of Democracy: A New American Story of Citizenship, the Economy, and the Role of Government.

    Comments anyone?


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    I've been trying to get this message out on my own, amazed that no one seems to be calling out the politicians on this. Any other year we'd be hearing GNP continually cited as a measuring stick for the economic strength of the country. This year it's save the wealthy , while knocking the buying power out from under the people. Most budget cuts have been aimed right at us, from federal cuts all the way down to local government. Plus, We the People dealing with reduced income, either from frozen levels of pay, reduced hours, or jobs loss, while costs of living rises.  A new log jam of foreclosures and financially disasters is being held in check by very week logs.  For God's sake, somebody listen!
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    Yes it's an uphill battle. The Republicans are masters of the effective soundbite. Frank Luntz is their wordsmither...the guy that dreams up words and phrases that resonate with the populace as they are repeated over and over again by every right wing politician and media pundit.

    "The Job Creators" is one of those short phrases that is religiously tacked onto any discussion of the rich. Any talk of increasing taxes on the Top 1 percent always gets met with a response like "taxing the job creators." Every single Fox News pundit and every single Republican invoke the phrase "the job creators" every time they are in front of the camera opposing taxing increases on the rich. It's a rehearsed Pavlovian type automatically conditioned and predictable...just like making a dog's almost comical.

    The sad fact of life is that it works. Pay attention as you listen to the debate on increasing taxes on the rich this year, and I guarantee you'll hear that expression repeated again and again. The dogs have been well trained. Too bad they can't think.
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    That response (Nick Hanauer) is kind of like putting the cart before the horse.

    How many people are starting businesses with just an idea.  You need more.  Specifically, you need CASH.  You cant start a bakery without cash for raw materials.  you cannot start a small sales office without cash for equipment and inventory.  you cannot do anything without CASH.  Affluent people have that one precious resource that allows for a company to start. 

    He makes a point that the feedback loop is what keeps it going.  But CASH is what starts it.  If the owner is too silly to pay attention to the feedback loop then it will fail and jobs will be lost.  However, if the owner pays attention to the feedback loop, then the business will flourish and he has done just what he says he doesnt... becoming a job creator - really more of a facilitator but why pick nits... 

    There is a full cycle going on when creating jobs and to look at only one aspect of that cycle is to miss the importance of all the steps in the cycle.  Quite a myopic view IMHO.
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    Well certainly one needs some capital to start a business, but some 75 percent of businesses are self-employed people with no employees, and generally their capital requirements are much smaller...maybe just a computer and internet access. Many have specialized expertise that they acquired from working for a firm and have gone out on their own...e.g. they have become consultants.

    For someone that has bigger aspirations...a restaurant for example, the start-up capital is indeed much higher, and one would hope they have acquired the necessary skills from having worked in a restaurant.  No restaurant, however, will succeed without a loyal customer base. In many cities across America that were especially hard hit by the recession, restaurants had to close up, not because the locals moved away, but rather because they couldn't afford to eat out as much as they used to. You need a consumer to buy the services or products first.  Without the consumer, the business start-up (as well as established businesses) is destined to fail.

    That's the point that I thought Nick Hanauer was making. It's a chicken and egg situation.

    The other point that I would make is that the super rich, having attained or inherited a certain level of wealth, are not so much interested in all the headaches of starting a new company and employing people.  Rather they are more into wealth preservation, so they'll do like Mitt Romney and move their wealth into the Cayman Island or Swiss bank accounts...or they'll just play the Wall Street Casino.

    I'm sure there are lots of anecdotal examples that could be used to argue either way.  A big corporation moving to a city will certainly create a whole new market for start-up shops and restaurants for the employees to spend their wages in.  The big corporations, however, are not the issue here.
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    Fastest and most efficient way to restore Aggregate Demand is a Full FICA Payroll Tax Suspension. 

    That's Tea Party. 2% is for Milk. 

    Point of federal taxes is to regulate demand + create demand for our currency. 

    Progressive taxes are the best means of accomplishing the purpose of federal taxation. 

    Regressive taxation is a fiscal drag. Everyone pays the FICA flat rate, from 1st dollar earned through 105,000.

    FICA taxes on employers are an unnecessary burden to pass on as a marginal cost of labor. 

    FICA taxes penalize self-employed people. Remember Joe Stack? He went nuts over this and flew his plane into the IRS, literally. Killed a Vietnam Vet in the process. Terrible day for the country. 

    Social Security, Medicaid, & Medicare are as solvent as we want them to be. Appropriations from Congress can fix any shortfall in spending. The size of the deficit or national debt is not the appropriate place for regulation.

    We should be reforming how government serves public purpose on the spending and private regulation side. Because that why it exists and that is what the government is for. A government that does not serve public purpose is merely a STATE. We should always be in the business of reform based on the merits of full reality based debate. 

    It is not more or less. It's about public purpose and only public purpose & MMT is about restoring public purpose. 


    Alice in Chains: "Your Decision."

    Full FICA Tax Suspension is a political winner, consistent with both parties' core values and beliefs - stripped of the nonsense, illusions, and myths that have led them astray.