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August 1, 2008

DO Rich People Create Jobs?

-- by Dave Johnson

"Rich people create jobs" and "Did you ever get a job from a poor person?" It's a popular line on the right-wing talk-radio circuit. They use it to argue that rich people should pay less in taxes... At right-wing Townhall.com,

The amount of money you make in your lifetime is basically up to you. . . . Who creates these new jobs? Rich people create jobs. There ought to be a national day of recognition for rich people for all they have done for the country. Liberals think if someone makes the right life choices, works hard, and becomes financially independent from the government, they have to be punished with higher taxes to pay for all of the 45 year old minimum wage workers who never learned how to do anything.
Discuss.

Posted by Dave Johnson at August 1, 2008 6:42 AM

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Comments

People who want to be rich create jobs. The majority of new jobs are created by small companies. The typical entrepreneur is not rich when they start, but rather middle class. They have accumulated enough experience and seed capital to make that bold leap. If successful they get rich, but usually in a "millionaire next door" kind of way. Despite the horrible failure numbers for new products the survival rate for small businesses is relatively high.

Posted by: Frank the sales forecaster at August 1, 2008 7:45 AM

Assume for a moment that everyone had as much drive as the most successful business man in America. Could we all be as rich as him if so? Of course not. The idea of 'rich' is actually a vast pyramid scheme. The concept is to emplace people within your employ at the smallest wage you can get away with paying. They must then perform actual work which produces product of value. That value must exceed the cost of production and the cost of the worker. The rich person then siphens off that excess value and takes possession of it.
In essence, modern America merely idolizes a sort of parasite, that has many hosts instead of one.

Originally, the concept of wealth acquisition being linked to business ownership was encourage those with new ideas and concepts that could benefit society as a whole to put said concept into place on their own with no direct intervention from an outside source. That is why many large old companies still have placards in their corporate offices that depict their business started as 'one small building in smalltown USA, and look at how we've gown'. That model has since changed. The big booms of the 90s and 00s have nearly all been ones that entrepreneurs were effectively banned from since they required large amounts of capital to implement, these being the cell phone revolution, the housing bubble, etc etc. The one noticeable exception was the dot.com boom which produced quite a few rags to riches stories, although the vast majority did not have happy endings.

Basicly, what I'm trying to say is that the minimum wage worker, that which nearly all blue collar jobs are being reduced to, is the backbone of America. Once it is impossible to live or support a family on the low end of the wage scale, then we will see the very thing so many republicans despise: more people on the dole and higher crime rates as the desperate do something to stave off homelessness and starvation. If, due to inflation, the poverty level exceeds most low wage incomes, the effects would be dire. Poverty has been linked to higher drug use, poor family environments, poor health, low education rates. The list goes on. We as a society will never lift ourselves up so long as the corporate boot is holding us down.

Posted by: Talphon at August 1, 2008 10:19 PM

That was true in the 50's. I doubt that very few factories with meaningful American jobs will be built inside America - the so-called job building. Trickle down was the reluctant acceptance, transferring the so-called plus economic activity to the service economy.
The original theory that McCain pushes has been dead since the late 60's.
But some things NEVER die : McCains top economic advisors, Forbes and Gramm,want a flat tax. I heard McCain list it in his priorities in early June, and no one said anything. He has since switched to "fair and simple" but he means "flat."

And another thing : Mitt Romney made his money by slinging other peoples' money, and scraping off hefty percentages. How many factories has Mitt built? He represents a lot of what's wrong with America's economic health.

Posted by: Richard W. Crews at August 2, 2008 2:43 AM

Sometimes Dave, I think are playing naive while knowing partially the answer to your questions. It's partly true that 'wealth' employs and helps spread the "manure".

As the above, most of the small businesses I unfortunately worked for were run by people in the mid to lower middle class (which means I received few benefits, rare paid holidays, less than major corp. or govt. jobs). I also did a little business myself hiring temps. of as much as a couple years working for me, but again with ok wages paid out by no benefits as they or I couldn't afford them.

It's been said that 80 percent of all employment growth is from small business. That seems to fit and really small businesses which have less than 10 employees are the biggest sector in that growth. Most govt. mandates don't apply to smaller than 10 employee businesses so they often fly under the radar often not paying "payroll" taxes and almost never having health care employment.

At least Obama seems to know that and was wise to not push Hillary care on the lower middle class businesses that are really keeping most of the 'new' employees employed.

Posted by: datadave at August 2, 2008 11:19 AM

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