The Myth of Job Creators

For some reason, conservatives have been insisting on referring to rich people as “job creators”, but let’s take a quick second to logically break down some of the basics:

As Businesses

One of the most frequent arguments you hear is that you can’t tax rich people because they’ll be less inclined to start businesses or hire people to existing businesses. Yet, businesses have been making record profits, and executive salaries have gone, over the last half a century, from 10 or 50 times that of the average employee to around 500 times that of the average employee. In other words, they’re making more money than they did in the past, when they were taxed at higher rates and jobs were still fine and plentiful.

But for some reason, we have to tax them less, let them make even more money, allow them to pay us even less with poorer work conditions (think Chinese factory conditions and pay, often touted by certain conservatives as the “ideal”), and let the non-wealthy in the country shoulder the burden of all the sacrifices that need to be made, because somehow the wealthy today are incapable of doing as much with more resources than the wealthy forty years ago.

Either they’re spectacularly incompetent or they’re spectacularly greedy.

As Individuals

There’s all this talk about the “Trickle-Down Effect”, but the fact of the matter is that the wealthiest in this country don’t spend nearly as much as they take in every year. Perhaps if they spent almost as much or exactly as much as they took in, that money would constantly fluctuate throughout the market, but they don’t. They hoard it. Which means that the wealthiest 1% of the country have effectively factored over half the wealth out of our economy. That money might as well be on Mars for all the good it does anyone.

In reality, the (sadly diminishing) middle class is the driving force behind job creation, because we buy things, and there are a lot of us. The wealthiest 1% is only so many people. There’s no reason for them to buy ten times the amount of food they’d need, or even ten times the amount of luxury goods. There’s no incentive for them to spend more. And even if they bought extremely expensive things in order to unload a lot of money, those expensive things won’t necessarily create more jobs, as it’s unlikely that creation of one extremely expensive car, for instance, generates more jobs than the non-luxury equivalent. The wealthy minority doesn’t increase jobs through increasing demand, at least not in a way that’s significant. Car manufacturers make more money from non-luxury vehicles than from their luxury equivalents, because more people can afford to buy the cheaper models.

This is why a more balanced distribution of wealth is NECESSARY for a healthy economy. It’s the MIDDLE CLASS who are the job creators, not the wealthiest. Regardless of the myths about “Job Creators” that you hear coming from politicians, there’s absolutely no reason at all to allow the rich unmitigated wealth at the expense of the rest of us. In fact, that only makes everything worse. (And for you libertarians out there, a fraction of the population being able to afford to buy more than just the basics does not a free market make.)

6 thoughts on “The Myth of Job Creators”

  1. Quite true. I noticed the blog has been mostly stagnant for a while now. Will it ever get going again? I will consider a new Chick Dissection an adequate answer. Good day to you.

  2. There’s another dimension to this too, one that relates to health care. I’ve read that companies generally don’t like to pay taxes on payrolls, so what they do is they take money out of payrolls and put it into non-taxable healthcare.

    Result? The workers get lavish healthcare plans (and go to the doctor’s for every bump and sniffle) but have little to nothing they can actually SPEND in meaningful ways. And, when people can’t spend, everything else goes along with it. Things get more and more expensive because other companies stop producing so much due to low demand. Sales tax goes up ’cause nobody’s buying and the state has to fund itself. I’m sure there are a lot more things that follow.

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