Sadly, no one will ever see the tape of the guy that gave the speech because TED, a site I love and until today used to respect, won’t show it. It was given by Nick Hanauer, a Seattle-based venture capitalist.
It is astounding how significantly one idea can shape a society and its policies. Consider this one.
If taxes on the rich go up, job creation will go down.
This idea is an article of faith for republicans and seldom challenged by democrats and has shaped much of today’s economic landscape.
But sometimes the ideas that we know to be true are dead wrong. For thousands of years people were sure that earth was at the center of the universe. It’s not, and an astronomer who still believed that it was, would do some lousy astronomy.
In the same way, a policy maker who believed that the rich and businesses are “job creators” and therefore should not be taxed, would make equally bad policy.
I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.
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 a “circle of life” like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary middle-class consumer is far more of a job creator than a capitalist like me.
So when businesspeople take credit for creating jobs, it’s a little like squirrels taking credit for creating evolution. In fact, it’s the other way around.
Anyone who’s ever run a business knows that hiring more people is a capitalists course of last resort, something we do only when increasing customer demand requires it. In this sense, calling ourselves job creators isn’t just inaccurate, it’s disingenuous.
That’s why our current policies are so upside down. When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.
Since 1980 the share of income for the richest Americans has more than tripled while effective tax rates have declined by close to 50%.
If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. And yet unemployment and under-employment is at record highs.
Another reason this idea is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the median American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, we go out to eat with friends and family only occasionally.
I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or cars or enjoy any meals out. Or to make up for the decreasing consumption of the vast majority of American families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.
Here’s an incredible fact. If the typical American family still got today the same share of income they earned in 1980, they would earn about 25% more and have an astounding $13,000 more a year. Where would the economy be if that were the case?
Significant privileges have come to capitalists like me for being perceived as “job creators” at the center of the economic universe, and the language and metaphors we use to defend the fairness of the current social and economic arrangements is telling. For instance, it is a small step from “job creator” to “The Creator”. We did not accidentally choose this language. It is only honest to admit that calling oneself a “job creator” is both an assertion about how economics works and the a claim on status and privileges.
The extraordinary differential between a 15% tax rate on capital gains, dividends, and carried interest for capitalists, and the 35% top marginal rate on work for ordinary Americans is a privilege that is hard to justify without just a touch of deification
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Rather they are a consequence of an eco-systemic feedback loop animated by middle-class consumers, and when they thrive, businesses grow and hire, and owners 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 here’s an idea worth spreading.
In a capitalist economy, the true job creators are consumers, the middle class. And taxing the rich to make investments that grow the middle class, is the single smartest thing we can do for the middle class, the poor and the rich.
The irony of this talk not being released is that it’s now all over the news that it’s not being released by TED. However, it is being released, and rightfully so, by everybody else. As a result, it will get far more exposure than TED would ever give it, if its appearance on YouTube is any indication
We understand stress just fine. It’s the whining that puzzles us.
While the above quote from the article is more than enough reason to kick the person that said it square in testicles with steel-toed shoes, you probably won’t be able to because of the vomit-inducing qualities of the rest of the article. The only good thing about the article is that you can sit there and, at the very least, feel vindicated knowing what you knew all along:
Rich != Smart.
And the 1% wonders why it’s being villified.
Just as an aside, I wonder how many readers of Mr. Schiff’s statements are concerned that the poor guy can’t make it on $350,000 a year? I wonder when the last time this douchebag even looked at, let alone compared, price tags at the supermarket. And the douchebag accountant with his
“Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”
I guess the precious little snowflakes will just have to tough it out in public school.
You can read this on your iPhone while your filling up your tank.
I am 42 year-old married father of two who has spent from 2007 until now trying my best to outrun a recession that I feel has been breathing down my neck. I am fortunate enough that both my wife and I have good jobs and stable incomes right now, but there was a time not that long ago that I was laid off twice in 6 months and when I wasn’t sure if my next paycheck was going to come, let alone clear. I busted hump, pressed flesh, kissed ass, and basically had to prove that I was hungrier, more aggressive, and just wanted it more than my competition to get the job I have now. The sad thing is that all 124 people who wanted the same job I got have it a lot harder.
I am the 99% and so are they.
I consider myself very, very fortunate. I have a great life. I have the best wife anyone could hope for, two beautiful kids, and a nice house to live in. Both my wife and I are gainfully employed, which means we want for nothing. We make enough money to pay the bills… even the unexpected ones… and have some left over so that we can take the kids (or just my wife and I if we need the getaway) on vacation every once in a while. Those of you out there who somewhat resemble my situation need to really repeat the above mantra over and over and over again until it really sinks in, because just how fortunate I am was brought into sharp, laser-beam focused, blazing, crystal clarity yesterday afternoon.
I was deep in the throws of work yesterday when my cell phone rang. It was my wife calling me to ask me if I could pick up our son from school so that she could get my daughter from daycare and then immediately hit the grocery store which was right across the street. I said no problem and then went about finishing my day’s work before leaving to pick him up.
The end of the day rolls around. I’m finishing up the last bit of work on my laptop (I work from home) and my son is finishing up his homework when my wife comes in, arms laden with grocery bags. I help her unload the remainder from the car, and while our kids are playing, she sits down and tells me this story which I will relay to you all as best as I can:
My wife had a pretty big load of groceries to buy as we were out of a lot of stuff, so as she is going down each aisle checking off her list, she keeps coming across this family… a mom (a working mom, she was professionally dressed) and two kids, one seven and one about three. The kids are doing what you and I did when we were little and what all little kids do in the grocery store. Every single sugary breakfast cereal and fruity roll-up snack and Oreo/Chips Ahoy cookie bag is grabbed and the phrase “I WANT THIS! CAN WE PLEASE MOM?” is yelled out. Being a kid myself once, I remember the answer of “No,” or “We already have that at home, so put that back,” coming out of my grandmother’s mouth as I’m grabbing for the economy size box of Count Chocula with the toy prize inside. My wife watches out of the corner of her eye as this mom puts back the boxes on the shelf that the kids have been trying to shovel into the cart as she feverishly carries a running total of what she has on a slip of paper and moves onto the frozen food aisle.
As my wife is loading a box of Klondike bars into the cart, the seven year-old asks mom if they can get Klondike bars as well. Mom proceeds to answer her son’s request…
You know we don’t have a lot of money since daddy lost his job. Your momma lost her job today. You and your brother can get one snack and that’s it. Once you pick, no more buggin’ me and no changin’ your mind. The rest of the money is for only what we need. (She looks at the price of the Klondike bars) These are too much. Go put them back.
My wife stood there stunned at overhearing this and saddened as she watched a dejected little kid put a box of ice cream bars back in the freezer. She looked down into the cart for our family stuffed to almost overflowing with food… and a lot of it could not be characterized as a “need.”
Before the mom could move to the next aisle, my wife did something that I will love her for until the day I die. She grabbed a box of Klondikes and pulled some cash out of her wallet, and handed it to the mom saying, “Please take this if it would make today a little easier.” The mom cried. My wife cried. They hugged, and then both went on to continue their shopping trip.
My wife continued in the frozen food section when footsteps come running around the corner. As if one extraordinary grocery store event wasn’t enough, the 7 year-old comes back to my wife, Klondikes in hand, and gives my wife a big hug and kiss, and proceeds to put the Klondike bars back, grabs another set of chocolate ice cream bars and exclaims…
This is my mom’s favorite snack!
… and runs back to his mom’s cart.
By this time, I am now tearing up at hearing this story. My wife knew this story would affect me somewhat because of the parents being laid off. Before the job I currently have, I had lost a job twice inside of 6 months. The feeling of having to go home and tell your spouse that you have no money coming in and you don’t know if/when you’re going to find another job is a feeling I would have just as soon left a repressed memory. I was lucky enough to find a new job with another company fairly quickly and as a result, we’re still making mortgage payments, still buying groceries, the lights are still on, and the water still runs. I listen to this story my wife tells me and I cannot fathom the feeling of hopelessness that two desperate people will experience staring across the table from each other after they put their two kids to bed going “What are we going to do now?”
My seven year-old is just now starting to get a bit of a concept of the power that money has, but for the most part, as far as he and his sister are concerned, things like Christmas, birthdays, food on the table, clothes on your back… all that stuff just magically appears. They really don’t have much of an idea of its limitations as there always seems to be enough of it to be comfortable. The two children of this beleaguered mother will be introduced to some very harsh realities about money in the coming months, and probably a year or more if the state of joblessness in this economy is any indication, because this family now has far bigger long-term issues than a $3.00 box of Klondike bars to deal with. Once income stops, the countdown starts. It’s the countdown that determines how long can you rely on other family for help, how long can you rack up debt, how long until they cut off electric, how long until they repossess the car, how long before the first doctor visit with no health care, how long before the bank forecloses, etc.
If there is a bright side to this story at all, it’s in the actions of that 7 year-old boy. My wife did not extend her gesture in order to be mentioned in a blog as a good Samaritan. She did it because she saw somebody who had the rottenest of all rotten days and who needed just one thing to go OK in their life, so she tried to extend that one thing. My wife gave of our resources. The little boy gave of himself and in his little world, he gave till it hurt. He had campaigned for those Klondike bars and once he got them, he gave them up and put his mom’s happiness over his own. This world could learn an awful lot from that kid’s actions. We think we’re such big deals as grown-ups, but some of life’s most valuable lessons that start out as innate get un-learned as we grow up and that’s a damn shame. Self-sacrifice is very much a part of that child’s nature. I hope it stays that way. Just think if those that caused the economic mess we are now in were a little less self-serving and a little more empathetic. I assure you the world would be a different place.