Sunday, May 20, 2012

The capitalist myth of job creation

Randi Rhodes made me aware of the following video below with Nick Hanauer, himself a multi-millionaire venture capitalist. Therein he makes the following points:

It is a myth that if taxes on the rich go up that job creation will go down. Who are the real job creators? The consuming public. Yes, an initial start up hires people. But without consumers to buy the products, the jobs created would evaporate. There is a necessary feedback loop between businesses and consumers. No consumer demand, no hiring. In fact the reverse, layoffs, something we're all too familiar with.

As evidence he cites that business now enjoys the biggest tax exemptions and the lowest tax rates, but all that happens is that the rich get richer while the unemployment rate has gone up. If the myth above were true we would be drowning in jobs but are not. He also notes that there could never be enough super rich people to make up the difference in consumption necessary to power the economy. While the 1% make thousands of times the income they don't spend thousands of times as much money.If the typical family share of income in the 70s were the same today, the average income would be around $92,000 instead of the reality of $50,000, showing how real income and buying power has been drastically reduced and incapable of the necessary consumption.

He also addresses the low capital gains tax rate of only 15% while the top wage tax rate is 35% is not justified. When the former does not pay its fair share the middle class cannot grow, for that tax revenue goes to providing opportunities for everyone and allows for middle class incomes to increase, and for low income families to enter the middle class. And which benefits everyone, including the rich. Granted they might be as rich as they are under the current system, but that system is not for everyone. And it's high time that everyone get a shot at a better life, not just the 1%.

Also see Nick's blog post on this topic.

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