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http://www.businessinsider.com/rich-people-do-not-create-jobs-2011-12

Apparently not rich people, according to the article.

Ultimately, it is always YOU who creates your job.

If you can think of ways to be valuable to rich people, they will gladly employ you.

You could basically redux the entire article to this one statement:


Rich people make businesses but those businesses must provide goods and/or services. The economic health of the nation creates much of the demand and that demand drives prices which drives jobs. To imagine job creation as independent of the economy is foolish and to imagine the economy as a top-down hierarchy rather than a tangled hierarchy is also foolish. Those insinuating that "the rich create the jobs" are grossly oversimplifying a system which has proven extraordinarily difficult to simplify.

Rich people invest, and investment creates jobs. Employees need to be worth the capital to be hired, but ultimately the investment creates the jobs ergo rich create jobs.

Rich dude couldn't get at all that resource buried underneath the ground by himself. A group of "workers" could organize and do it without him though.

In the US consumerism creates jobs, which is really dependent on companies having enough money to tell you what you want.

In America, ad space being available is a bad sign.

You couldn't be bothered to read the article could you?

I did.

Yet another non-economist spewing out ignorant opinions on macroeconomics, based on nothing but his personal microeconomic experience and anecdotal evidence.

Then the author going, "oooh listen to that guy, what he is saying must be true, I mean he is RICH after all".

The arguments presented are so crude and simplistic that even Krugman could point out flaws in them.

In fairness, the article is right about one thing: The indiscriminate spending it advocates would create jobs of SOME sort.  But if the author had even a minimum of economic literacy he would know that indiscriminate job creation is not the POINT.  

The point, and the big challenge of economic policy,  is the creation of useful, productive jobs.

Speaking of crude and simplistic arguments, how do you like "Rich people invest, and investment creates jobs."?

What is a useful, productive job then? If the jobs created by catering to the needs and wants of the people who happen to have extra cash to spend, as the example in the article, isn't good enough, then what is?

The error in the article is taxes have gone up.  Federal, State, and local taxes now take up 42% of GDP.  Before 1929 it was never higher than 5%.  This forced factories to move overseas, thus the jobs are created there, why we have high permanent unemployment.

The solution end minimum wage and all business taxes.

BTW, Obama with the payroll tax cut, just gave everyone a $1000 pay cut.  But, it should help business profits and thus the economy.

This is mistaking the effect with the cause. The markets create jobs, and investment realizes them. Without a favorable market, the investment would not happen in the first place.

No, a company will not expand unless there are profits.  Suppose someone has a fence that needs painting, but the owner needs money to paint the fence.   The government says tax the people with money and give it to poor people so they can hire someone to paint the fence.  The capitalists says let the owner paint his own fence and buy his own paint.

Everyone creates the jobs, we're creating jobs for Microsoft and the people around the entire www.

Good food for thought.  I'm not sure I agree with what I understood to be the ultimate point of the article (that we need to tax the rich more) but it does seem to be true that if there is no demand it doesn't matter how many companies you start up, they won't survive.  It seems that one group of people likes to focus all on the supply (rich people create businesses and grow the economy) and the other group of people focus all on the demand (tax the rich and give money to poor people so they can spend it to create jobs).  It is true that without capital accumulation we cannot expand businesses, create new ones and grow the economy, but people do need to have money to spend.  Supply and demand are two sides to the same coin.  I'll have to think about this more and do some more reading of economic texts to see if I can find a solution that satisfies me.

And things were so much better in 1929.


Quite the opposite. Corporate taxes have been going down since WW2 while labor tax has been rising. The result is the rich got richer but the economy is in shambles because consumers have no spending power.

http://1.bp.blogspot.com/_DyMZu-G10uA/TPzfklT0c1I/AAAAAAAABlY/A58GbG1rOgw/s1600/6a00d8341c4eab53ef013489aa7cf5970c-500wi.jpg

http://img513.imageshack.us/img513/9582/productivityandrealwage.jpg (http://imageshack.us/photo/my-images/513/productivityandrealwage.jpg/)

Interesting charts P4man. Can you give us the source so we can see what the numbers mean?

Alright, let's see the argument.


These companies that employ thousands of people aren't creating jobs? Those jobs would exist without those companies? I think not. Nice try.

Keep reading. You almost made it to the interesting part.

I'm glad you admit the article isn't entirely interesting but I did read it and the followup. It boils down to the claim that without customers, there would be no jobs. Which is true. But wait, without the sun, there would be no jobs either. Therefore the sun actually creates the jobs. All hail Apollo, the sun god!

We already have a sun, so thats not relevant. We already have companies making just about everything that people desire and that money can buy. What we dont have is customer demand for their products because the customers are broke. Its not rocket science.

Thanks for the article and graphs p4man, it's a good read.  i also like his rebuttal linked at the end. 

No you moron, people aren't going to found companies when no one has any money to buy their products. This is the core of the problem. Republicans have been giving tax breaks to the rich and tax hikes to the poor for so long now that the rich have more money than they can ever spend while the poor are forced to buy essentially nothing, which stifles the economy and prevents job growth by decreasing demand for essentially everything.

No need for name-calling. Although I disagree with almost everything b2c writes I think we should try to keep the tone civilized and respect each others viewpoints.

Where do you get the idea its the "republicans" specifically that are to blame? Also, which tax hikes to the poor are you talking about and what are your definitions of rich and poor?


http://upload.wikimedia.org/wikipedia/commons/thumb/0/01/United_States_Income_Distribution_1947-2007.svg/1000px-United_States_Income_Distribution_1947-2007.svg.png

Basically I think this thread is getting too emotional so peoples arguments are starting to suck.

Possibly something to do with the Reagan era tax cuts, the Bush era tax cuts, the second bush era tax cuts and the extension to the bush era tax cuts that republicans forced through congress.

When I hear politicians making the "job creator" argument I can't help but wonder if they think I have down syndrome. The idea that a business person would leave money on the table because their personal taxes are too high is ridicules.
If my customers demand is higher than my ability to produce, then I hire someone. It does not matter what I pay in taxes. I hire people to make more money for me, not some act of kindness.
So, who creates jobs? I do. (well, I have.) Want me to create more jobs? Then show me how it will lead to greater profits and the job is yours.

So why didn't the democrats repeal them? Why not force their own bills through congress? Also I was more confused on what tax hike you were talking about on the "poor."

My main thing though, is that I am interested in your complete lack of interest in monetary policy. Apparently your model for how wealth has been draining into the hands of the already rich is completely fleshed out without needing to take that into account. Impressive.

So I've been thinking about this.  It makes sense that you need demand for products as well as companies to actually produce those products.  Also, I understand that the disparity in income is increasing, but I'm not so sure that poor people are buying less stuff.  Most of my friends have higher standards of living then I do regardless of whether or not they earn more than I do.  For example, my brother earns far less than I do but has an x-box, play station, lots of games for those consoles, movies, tv shows, x-box live, bigger flat screen tv than I do, etc.  I have an x-box which was given to me by someone and have only bought one game for it.  My wife and I bought a flat screen TV for just over $100 because we used gift cards from out wedding.  We buy cheap food as much as possible and don't eat out very often.  I'm in school and so funds are pretty tight most of the time. 

Perhaps part of the problem is people who live outside of their means?  I know plenty of people who make fairly low wages (like I do) but who have gotten new vehicles because they magically got approved for loans with little or no down payments.  This then saddles them with debt for years keeping them from developing savings that can be used to improve themselves (schooling, start up business, whatever) and increase their wages.  I'm not trying to blame poor people entirely for their own poverty, but certainly wise financial decisions have to play a part.  So, anecdotally, at least, it seems to me that "poor" people are still spending lots of money. 

Anyone have thoughts on this?  Are people living outside of their means and how does that affect the economy? 

P.S. I'm referring mostly to Americans, not because I'm trying to be ethnocentric but it's where I live and what I have experience and context for.  My apologies to JA37 and anyone else who is from a different country.  Perhaps the situation in Europe or Australia is different.  I'd be curious to hear your thoughts on the situation in your respective countries.

People have been maintaining living standard despite falling (relative) wages by increasingly getting in to debt for almost a generation.

http://www.creditwritedowns.com/wp-content/uploads/2008/07/household-debt-vs-savings.png

Most of this debt was mortage debt. This has kept the economy going for a while, but as you can imagine its not exactly a long term solution.

As for other countries, this may interest you:

http://enduringsense1.files.wordpress.com/2010/02/5-savings.png

hmm, is there a reason you appear to be equating relative wages with personal savings rate?

But why?  Are they simply unaware that their relative wages are falling?  Are loans to easy to get, should they be harder to get?  Is it a matter of educating a culture of savings?

All of the above I suppose. There used to be a time were people bought their cars and often even houses with money they had saved. Today thats impossible for the majority of people. There used to be a time when you didnt get 29 credit cards in your mailbox without even asking. When you didnt need loans to get through college. Where households got around nicely with just one income.  Ask your parents or grand parents, they might remember.


Perhaps, but the real solution can only be to increase wages. The current wealth inequality is back to the levels from just before the great depression:
http://philebersole.files.wordpress.com/2010/12/top-10-share.jpg

Fixing that by at least taxing the rich IMO is not a matter of fairness, its a matter of economic common sense.

The people create jobs, not government.

The government kills job making ability of the people by creating restrictive laws, restrictive enviromental legislation, and ratification of restricting treaties.

The government used to get their money for projects and services from mainly trade tarrifs.

They are now gone and we have WTO, NAFTA, and GATT which effectively killed our manufacturing infrastructure and domestic markets.

Gone also are the farmers who once supplied this nation with food.

You can thank your representatives and the people who keep voting them into office.

Make illegal and treasonous, under penalty of death, any lobbying of our representatives or 3rd party political advertising or donations offered or accepted and you have fixed the majority of the problems. Then vote in sane legislators who will work for us because they have no one else to work for.

Now, the govenrment is so big and so many rely on it instead of themselves, that I dont see any meaningful change coming anytime soon. The masses feel entitled whether by ideology, greed, or just plain and simple need for survival.

It all boils down to us, The People. Its our own fault for our apathy and disinterest, allowing our employees to take over and tell us, their employers, what to do and how to do it, so dont expect us to bite off the hand feeding us any time soon.

So you propose taxing the rich and what?  Giving the money to the poorer people to spend?  Using it on infrastructure?  Government creating jobs?

Or pay down the debt, or lower taxes on the other 99%. Its not up to me to say how US taxpayers money should be spent, whether its on a functional healthcare system, infrastructure, education or something else, but from an economic POV its madness to have an upper 1% who own nearly 40% of the wealth and effectively tax them at lower rates than the bottom 99%. Wealth doesnt create jobs, demand does.

That's not strictly true, either.  You have to have capital (wealth) to start a business.  But without demand you will not survive long.  Like I said earlier it's a double-sided coin.  I would like to see taxes lowered on everyone and I'd rather see spending lowered then taxes raised.  The US government survived just fine without an income tax all the way up until 1913 and since then it's just been one excuse or another to keep raising taxes.  Taking a third of a working person's income seems much much too high in my perspective, especially with the sorts of things I see it spent on (undeclared wars overseas, corporate subsidies, fat wasteful defense contracts, inefficient welfare programs, etc.). 

There is not exactly a lack of capital. US banks are literally sitting on trillions of dollars, thats not the problem. The problem is the majority of consumers are broke.


Whether a third is too much or not you can debate, what really matters is what you get for your tax dollars. I actually dont mind paying over a third (in fact I pay about 50%) since I get a lot back for it. Decent infrastructure and public transport, excellent and virtually free healthcare, top notch and virtually free education and a social security system thats good enough to give me peace of mind even in difficult times. If I were to pay all that out of my own pocket Id likely end up paying more for less.

But if people want less of that for less taxes, thats fine. As I see it the major problem in the US is the political system that legalizes corporate bribery. As a result you have a government thats not working in the people's interest, but for special interests and your tax dollars are wasted and further enrich the rich. I can understand that breeds hate for government, but  IMO the solution to that is not so much shrinking the government as fixing campaign financing and "lobbying". If one day you again have a government that is by and for the people, perhaps you may be less inclined to want to abolish it and end up with a Somalia style government-"free" country.

I think the article really does not highlight the fact that the middle class must have expendable income, and rather just makes statements without good evidence. however, he does have a point, even if it is not clear. All elastic goods will not be purchased if the average consumer cannot afford them, which is the major issue here.

If there's demand, not just a will but also means to buy something, there is capital. Demand is key. Wealth is optional.

So you are saying that if the average person has enough money he will invest it himself?

If the average person has enough money to finance his desiderata, if and when its needed, someone will invest to provide those. The idea that there isnt enough capital for investment is ludicrous; never in recent history has there been a greater concentration of wealth. That wealth is available to invest, the only thing thats missing is the incentive.. ie, profitability of the investment.

We/people create jobs, the government tries to take it away from us.

Atlas. Unremoursefully.

Jobs are stupid, robots are the future.
The rich should just build or buy robots, and the robots should produce everything and build everything, the people should all be fired and YES who gives a shhh about the poor people without a job, In my opinion it is pointless to have more jobs, I think less jobs are better but more productivity using automation is the key to the future.

Whos gonna buy the products if everyone is jobless?

The robots will do the shopping obviously. They will be programmed to use currency with advertising space(ads directed at the robots) somehow associated. For example, an image on a dollar bill. The humans will own the capital and split the ad revenue amongst themselves, then pay the robots to shop.

+1

Thats not correct.  Most investors are institutions managing the savings of working people and retirees.

Actually, small and medium sized companies are creating the most jobs.
Since most of them are not running at full capacity they don't see a reason to hire more people.
They only hire more if they can sell the products.

Are those the companies that get the big tax breaks? It would make sense, wouldn't it?