Who Are The Job Creators?

[Lakhota]

By Kenneth Quinnell

In the face of a constant stream of arguments from Republicans that the wealthy are job creators and thus deserve lower taxes, billionaire venture capitalist Nick Hanauer recently gave a 'TED Talk' explaining that the rich don't create jobs, but that it is instead consumers who create jobs. TED is an annual conference for elite Americans where presenters talk about various technology and other topics and the so-called 'TED Talks' are posted online, appear on YouTube and Netflix. Only in this case, the TED organizers are refusing to post Hanauer's talk, saying it is 'too controversial.' The step appears to be at odds with the way the organization has worked in the past, as it has frequently posted controversial TED Talks. It appears that TED chief Chris Anderson isn't comfortable with Hanauer's presentation, not that it is particularly controversial:

"An ordinary consumer is more of a job creator than a capitalist." ...really? as an ex entrepreneur who agrees with your overall stance, I don't think that statement is literally true. There are numerous jobs that exist because of the imagination, energy and risk-taking of individual capitalists or entrepreneurs such as you. An typical ordinary consumer might on average contribute to the creation of one job (but probably not more than one, because the numbers don't then add up.) "hiring more people is a course of last resort, done if and only if rising consumer demand requires it". ...I launched numerous magazines for each of which, at time of their launch, there was zero consumer demand.

In each of those cases I hired teams before launching and before knowing whether anyone would buy. Businesses do this all the time. They imagine a product, and take a risk. You might say there must have been latent demand, and that in the short time period you had, you didn't have time to fully flesh out the argument.. sure. But I think a lot of business managers and entrepreneurs would feel insulted by that statement as given.​

Anderson sounds awfully defensive and his final statement is that 'business managers and entrepreneurs' would be insulted by something that is, it seems quite obvious, is the truth seems disingenuous at best.

An excerpt from Hanauer's presentation (see full talk below):

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.​

TED Refuses to Post Talk By Venture Capitalist Who Says Rich People Don't Create Jobs | Crooks and Liars

An Uber-Wealthy Venture Capitalist Gave A TED Talk Saying Rich People Don't Create Jobs

Nick Hanauer - YouTube

 

[Lakhota]

It's refreshing to hear economic sanity from a rich person.

 

[edthecynic]

 

[Dont Taz Me Bro]

I don't know where you got that graph from (some partisan hack site, I'm sure), but it's inaccurate. It does not reflect the 4-5% unemployment rates from 2005 through 2007 prior to the crash. Therefore, it has no credibility.

 

[Dont Taz Me Bro]

It's refreshing to hear economic sanity from a rich person.

In other words, sanity equates to him agreeing with your view of economic, whether it's an accurate portrayal or not.

 

[Truthseeker420]

People with money in their pocket.

 

[Oddball]

People with money in their pocket.

Yeah, enough money to pay for business licenses, tax use licenses, liquor licenses, food service licenses, rents or purchases of store fronts, vendors and purveyors, employees, accountants, lawyers, etcetera, before opening their doors to serve one single customer...er...I mean "consumer".

 

[Avorysuds]

I think we should tax everyone over 250k a 90% unavoidable tax rate... Then we can take that money, start new programs in HC, Education and whatever else sounds "smart" even though at that 90% tax rate the revenue can't pay for the new programs. Then we add that deficit new spending to the other deficit spending and blame Austarity.... Samll Government and anything but the problem.

 

[Avorysuds]

People with money in their pocket.

Yeah, enough money to pay for business licenses, tax use licenses, liquor licenses, food service licenses, rents or purchases of store fronts, vendors and purveyors, employees, accountants, lawyers, etcetera, before opening their doors to serve one single customer...er...I mean "consumer".

It is amazing what it takes just to get the doors open. When you write up a business plan you really see just how much Government slows down, kills and costs someone starting a business. Of course Business owners must pay these high taxes/fees because without them we would still be running a massive deficit seeing we don't even come close to taxing enough to pay for what we currently have.

Someday we will have to cut, but that will be after a very long a hard depression... Oddly we might be in the beginning phase of that depression.

 

[MuadDib]

The only time poor people ever create jobs, it involves taxpayers' money.

 

[Truthseeker420]

The G.O.P. says global competitiveness requires the United States to reduce its corporate tax rate. But the United States actually has the lowest corporate tax burden of any of the member nations of the Organization for Economic Cooperation and Development.

Bruce Bartlett: Are Taxes in the U.S. High or Low? - NYTimes.com

 

[Stephanie]

It's refreshing to hear economic sanity from a rich person.

It would be refreshing to see you think for yourself for a change..

good grief.

 

[yidnar]

It's refreshing to hear economic sanity from a rich person.

most business owners [small business owners] have been hurt by the lefts regulations !!! they are the ones who hire people,creat new products for consumers ect ... and they hate your dear communist leader !!!

 

[AquaAthena]

"Who Are The Job Creators?"

Creative men and women who are ambitious, willing and able to work twice the amount of others, in order to realize their goals. Smart people with big ideas.

 

[Sallow]

I don't know where you got that graph from (some partisan hack site, I'm sure), but it's inaccurate. It does not reflect the 4-5% unemployment rates from 2005 through 2007 prior to the crash. Therefore, it has no credibility.

Those low UE numbers were the result of 2 wars and a housing bubble.

High fliers..like Carly Fiorina..fired 30K workers from HP..and said she couldn't do it fast enough.

That went on all over the IT industry. And manufacturing jobs were being shipped overseas. Over 30,000 manufacturing plants closed their doors in the US.

 

[Lakhota]

In each of those cases I hired teams before launching and before knowing whether anyone would buy. Businesses do this all the time. They imagine a product, and take a risk. You might say there must have been latent demand, and that in the short time period you had, you didn't have time to fully flesh out the argument.. sure. But I think a lot of business managers and entrepreneurs would feel insulted by that statement as given.

I contend that Anderson's argument doesn't hold up. Here's why: Entrepreneurs routinely take "calculated" risks based on their knowledge of markets (personal & surveys) and their risk tolerance to spend money and hire employees in anticipation of future demand for new products - but it's still demand driving those jobs. If they were wrong, and the demand isn't there, the new jobs disappear.

Anderson said he "hired teams before launching and before knowing whether anyone would buy", which I contend is disingenuous, because he had an educated and calculated expectation of future demand. Hanauer summed it up nicely in his statement:

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.

All above quotes are from the OP.

 

[Stephanie]

circle of life..?

what?

good grief

 

[Dont Taz Me Bro]

I don't know where you got that graph from (some partisan hack site, I'm sure), but it's inaccurate. It does not reflect the 4-5% unemployment rates from 2005 through 2007 prior to the crash. Therefore, it has no credibility.

Those low UE numbers were the result of 2 wars and a housing bubble.

Regardless of whether or not that is true, it's completely irrelevant to the fact the graph is false and non-credible.

 

[itfitzme]

I don't know where you got that graph from (some partisan hack site, I'm sure), but it's inaccurate. It does not reflect the 4-5% unemployment rates from 2005 through 2007 prior to the crash. Therefore, it has no credibility.

Yeah, it seems off.

So I checked the correlation between the top marginal rate and the average unemployment rate for each year.

For the span of 1995 through 2007, we get a coefficient of -0.26. For the span from 1995 through 2011, the coefficient is -0.42. What this means is that as the marginal rate decreases, unemployment increases.

A linear regression gives the relationship of (unemployment rate) = -0.3945 (top marginal rate) + 0.2042. And 25% of the variation in unemployment rate is accounted for by the top marginal rate.

So, what this says is that for every 1% decrease in the top marginal rate, there is a 2.53% increase in unemployment.

The chart shown, while questionable, comes out to a 2.11% increase in unemployment for every 1% decrease in the tax rate.

So, while it seems awfully questionable, it is actually a bit forgiving. It appears to be a bad presentation of the right conclusion

The facts is that tax decreases for the top marginal rate for individual income tax is far more detrimental to employment.

There are two ways to take this. Either lowering the rate caused increased unemployment or the increased unemployment drove the lowering of the rate which did no good.

Either way, lowering the tax rate on the wealthy does not create jobs.

 

[itfitzme]

Anderson said he "hired teams before launching and before knowing whether anyone would buy", which I contend is disingenuous, because he had an educated and calculated expectation of future demand. Hanauer summed it up nicely in his statement:

I would like to add that there are two ways to interpret his statement. Either as you do, that he in fact did have significant reason to believe that the gamble would pay off.

Or, he had no reason to believe it would pay off and is there for an idiot and lousy business person.

If, in fact, he is an idiot, his points lack credibility. If he is disingenuous, his points lack credibility. Either way, his points lack credibility.