Entrepreneur explains: the rich don't create jobs

Here's the TED talk by entrepreneur Nick Hanauer, in which he explains why the rich don't create jobs:

[video=youtube;CKCvf8E7V1g]http://www.youtube.com/watch?feature=player_embedded&v=CKCvf8E7V1g[/video]

 

They are not credible, bunch of hucksters who make money on lying to people. I watched one of their shows that argued the rich don't pay their share of taxes,but the top 10% pay 76% for example... just another group of charlatans out to make a buck hoodwinking people into class division and profiting from it.

The idea that you need domestic consumers is nonsense anyway. We have plenty of free trade deals with some broke countries going nowhere. you need to attract capital, and have it start production. Look at Tonga. Peaceful, educated, has a free trade deal with the UK, AUS, and US for every good it exports. Cant make any money, to much government involvement in industry and no capital attraction, the country has resorted to brain draining itself for remittances. You need capital to get it started, capital is what loses money for years while paying employees and suppliers. Not the presence of consumption. That always exists, it is what people do.

 

Well, if you consider that around 70% of the US, and other developed nations economies are based on domestic consumption, the position that the economies of developed nation do not need domestic consumption for economic growth is somewhat inconsiderate and perhaps grossly ignorant of the economic position that domestic consumption holds in today's economies.

It is certainly true that foundling nations can establish and maintain great economic grow through exports but they need to mature into economies where local consumption becomes the engine for further economic growth. Nations that do not make the transition to local consumption stagnate and decline. The leading cause of this is the theft of national wealth by crony governments in collusion with moneyed outsiders. This takes many forms, from outright bribery to allocate national resources to private interests to more complicated schemes where national leaders drive a nation into a debt crises which leads to lending requirements that accomplish the same. The end result is always the same, a nation impoverished for a generation or more, the national patrimony mortgaged off by irresponsible leaders bent on their own immediate needs. Tonga is a prime example.

 

The point is which comes first. I agree government shouldn't be investing in the economy stimulating business etc...that is another reason I am no fan of Obama. What do you think about his corporate stimulus investing in manufacturing etc... policies?

 

Government has always invested in the economy to stimulate business, it is part of its remit to promote the general welfare. Why else would it have passed the laws that allowed private corporations, or made land grants to the railroads, or built the interstate highway system, or funded basic research like that which ended up as the internet? It has been estimated that government funded research over the past 50 years has generated 80% of new economic development, as in industries and businesses that did not exist before, while building the interstate highway system has generated 40% of economic growth. Taken together it indicates that the economy would be far smaller today without these government investments.

US government activities have had a huge positive effect on the entire world economy from to its research funding. The failure of the US to become the leader in the many industries that have grown up from US research is entirely due to attitudes like yours. Leading research into solar power has been concentrated in the US since the 1970s and still is. The failure of US solar manufacturing to become dominant is because other nations adopted deliberate policies of government directed investment that allowed their companies to gain economies of scale, but not until the 1990s and later. If the US had adopted a similar policy in the 1980s it would be the dominant solar power manufacturer. It is the same with wind power, most of the technology was developed in the US but EU nations provided more encouragement for the wind power industry and it is now dominated by EU companies, who have reached levels of expertise and scale that makes it very difficult for US companies to enter the business and compete. Politics prevented, and still prevent the US from adopting any sort of long term policy that could allow US firms to become established in the industry. It has been a capitulation of the industrial future of the US through idiotic principle promulgated by the promotion of immediate ignorant selfish interest.

Except for the US, there is no developed or developing nation on the planet that does not have a formal government policy for industrial development. These policies generally consist of a combination of direct investment in development and engineering, direct lending and private loan guarantees, favourable tax treatment for investors, tariff and other protectionist measures for nascent businesses, and active government participation in export funding and negotiations for access to foreign markets. Obama's plan is quite lame compared to what other nations are doing to help their private businesses, a one out of ten. That you would be against even that illustrates an ill informed notion about global competition.

 

If you think it is fair to take from some people and give to others who lobby you then we are far apart on agreement. Obama taking money from hard workers and giving it to rich guys in the hopes they will make a profit is probably the worst thing about him for me. 75% of the funds go to campaign contributors. This type of rent seeing and corporate welfare is inefficient, and a terrible idea.

We had very little economic intervention during the Guilded age. Fastest improvement in the average life of US citizens, real GDP per capita more then tripled in 30 years. New industries sprang up fast, we out paced the rest of the world and became its richest nation. No central planning.

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If you think it is fair to take from some people and give to others who lobby you then we are far apart on agreement. Obama taking money from hard workers and giving it to rich guys in the hopes they will make a profit is probably the worst thing about him for me. 75% of the funds go to campaign contributors. This type of rent seeing and corporate welfare is inefficient, and a terrible idea.

We had very little economic intervention during the Guilded age. Fastest improvement in the average life of US citizens, real GDP per capita more then tripled in 30 years. New industries sprang up fast, we out paced the rest of the world and became its richest nation. No central planning.

 

Consumers don't create jobs, they create demand. That demand can be filled by foreign companies, or domestic companies. Or, that demand can go unfilled.

No matter how high the consumer demand, the consumer doesn't create jobs, entrepreneurs do.

An entrepreneur that lowers the cost of an existing product, not only creates jobs, but allows consumers to spend money on other products.

Nick Hanauer may make a lot of money, and says can't spend the same percent of his income on consumer items as his employees, but does he stuff that extra money in his mattress? No, he is a venture capitalist, he invests his money on entrepreneurs. How do these entrepreneurs create his wealth, without creating jobs?

 

Very little economic intervention during the Gilded Age?????
What alternate history of the US have you been reading?
If you think the politics of the time was less corrupt than it is now, you have been reading about an alternate universe. At least the politicians toss a few bones to the middle class these days.
The government may not have intervened so directly in the economy as it does now but what it did through legislation and the courts was what made the Gilded Age so gilded. Do you know why it is called that? It is because there were a few thousand extremely rich financiers who flaunted their wealth. For everyone else the gilded age was fraught with uncertainty and fear as irregular cycles of boom and bust created by financial adventures would unpredictably overturn the entire economy, destroying their savings by the $Billions as hundreds of banks closed their doors and tossing them by the millions into unemployment to fend for themselves in the streets.

The economic gains during the gilded age were the easy pickings of economies of scale which would bring improvements through lower production costs regardless of anything else. The periodic economic calamities of an unregulated economy are what made it take thirty years instead of twenty.
The economy of the Soviet Union increased the real GDP per capita of its citizens by ten times in thirty years despite a war which destroyed over half its industrial base, displaced a third of the population and killed 40million citizens. Communist China did much the same from 1948 to 1978.

 

Consumption cannot be separated from employment and wages since the consumer spending of employment wages is what creates the vast majority of demand, and that demand is what drives entrepreneurs who see a way to lower costs or make a new product that captures some of that demand for them. It is pretty easy these days for an entrepreneur to capture wealth without creating any jobs. Writing a popular app will do it, like that kid in England who just sold his app to Yahoo for $Millions.

That said, most entrepreneurs these days are not creating much new wealth at all but just capturing a share of the existing wealth that is sloshing around the planet.

 

What came first, the chicken or the egg? Business (the entrepreneur) fills a need. If a product doesn't exist, it can't be bought.

Did the kid capture wealth, or earn it?

Didn't he reduce the time people needed to keep up with what is happening in the world? The teen didn't hire anyone to write that ap, but did that time saving result in no net increase in jobs?

In the short term you are right. That is economics.

In the long term, the economy grows. Cost reduction of existing products allows room for additional products. Old products fall out of favor, new products catch on.

Is the ultra book a better laptop than the same priced notebook of 10 years ago? May be the same money sloshing around, but it buys better stuff.


What is your alternative?

 

Evidence?

Nope. Virtually all of China's GDP/capita growth has occurred since it abandoned socialism in 1978.

 

If you believe me to be lying it is up to you to come up with the evidence, which could be a simple Google search away, unless of course it does not exist.

 

I don't know if you are lying, but your claims are false. It is up to you to support them. I'm guessing you can't.

 

You need to learn the long established rules of debate, which come from the days of the ancient Greeks.
It goes like this:

An assertion is posited

A rebuttal is articulated

Debate is engaged

Simply denying an initial position or asking for supporting evidence is not generally considered to be a rebuttal that requires response. In many circles resort to such action is considered an abject failure of intellect. You need some logical train of reasoning, an assertion of contrary factual evidence, or some other such argument to support your position that my claims are false.

I have all the evidence I need, it is freely available to anyone who has access to the Internet through simple searches.
Are you confined to some sort of Internet gulag that does not allow you full Google access?

 

<yawn> I hold a degree in philosophy, with honors, from an internationally respected university, dumpling. You do not.

No, it doesn't go like that. An arbitrary, unsupported (and false) assertion is rightly dismissed as such without any further discussion.

Yes, in fact it is.

Only in the circles of the ignorant, foolish, and dishonest.

No, YOU NEED TO PROVIDE SOME EVIDENCE THAT THEY ARE TRUE.

And you can't.

Then let's see it.

<crickets>

LOL! Still expecting ME to dig up support for YOUR false claims? Why would I waste my time on such a wild goose chase?

Class dismissed.

 

Not really. China's annual real per-capita GDP growth 1950-1978 was 2.8% per year, which is pretty good. Annual real per-capita GDP growth in the US during the same period was 2.4% per year.

China's growth since 1979 has been phenomenal, however, averaging 6.6% (thru 2003), while US growth during the same period dropped to an anemic 1.8%. Supply-side economics at work.

www.ggdc.net/maddison/Historical_Statistics/horizontal-file_03-2007.xls

 

I should also mention that income tax rates in China are 45% if you earn more than $13,000 per year (much higher than in the US), and capital gains tax rates in China are 20% (vs. 15% in the US).

Mention that to your Republican friends the next time they tell you taxes are job-killers.

 

So you agree that as I said, almost all China's growth in per capita GDP has been achieved since it abandoned socialism. YOUR OWN SOURCE says that in the 27 years from 1950 to 1977, China's per capita GDP grew from 448G to 894G, less than double (and a very anemic performance considering that China was finally at peace, after having been wracked by warfare almost constantly for the previous century). In the following 26 years after 1977, its per capita GDP nearly quintupled, to 4803G.

 

You are going to credit central planning for China's recent success? Deng Xiaoping opened up the country a bit, and it rocketed. Turn China into Hong Kong, and it will be the richest nation in 2 decades, per capita in 5. Hong Kong would likely have passed us per capita if they didnt get a little Chinese meddling. Right now poor central planning is causing widespread mal-investment in China because people can't make normal investments for themselves.

Yes Roy L, I am prepared to support these statements with graphs and data.

Wow we have about the same tax rate as communist china?

 

China has "abandoned socialism"? Not on your life. China abandoned central economic planning, but 40 to 50 percent of Chinese GDP is still state owned, and will likely remain that way. Among the state-owned industries are armaments, power generation and transmission, shipping, oil and petrochemicals, telecommunications, coal, aviation, and (most importantly) banking and finance.

 

we now know trickle down economics doesn't work as it never trickles down - what we do know though is that bottom up causes entrepreneurs, small business owners and investors to work harder to get that money from the bottom all the way up to the top - bottom up is the only way to restore this economy, conservatives just doesn't get it

 

Classic.

You're talking about "hucksters" lying to people in the very same sentence in which you repeat the "huckster" lie from charlatans who hoodwinked you about the top 10% paying 76% of the taxes which you regurgitated here.

The top 10% have about a 50% share of all federal taxes. And that includes apportioning 70% of corporate taxes to them, which of course they don't actually pay.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/43373-Supplemental_Tables_Final.xls Table 2.

That would be a relevant analysis if there was a shortage of capital for investment. There isn't. To the contrary, there are trillions of dollars sitting in cash in corporate bank accounts and the offshore accounts of the 1%. What is missing is demand.

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If there is no demand, entrepreneurs won't create new jobs and businesses won't expand production.

 

Last year with data has it at 71%, I am closer.

There is demand all over the world, you dont have to break windows to build demand.

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Last year with data has it at 71%, I am closer.

There is demand all over the world, you dont have to break windows to build demand.

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Why do you support Obama's small business tax hikes?