Middle Class Consumers are the Real Job Creators

person

This is a 5 minute TED talk, well worth your time.

http://www.youtube.com/watch?feature=player_embedded&v=bBx2Y5HhplI

lamaramadingdong

I agree. Thanks for sharing, person.

Floating_Abu

I only got to 1:30. I thought his comments were foolish. Of course not only rich people/businesses create jobs, but neither do only consumers. He's a bit scripted to my ear ...The economic situation is complex and difficult, which is why not even the smartest minds can necessarily 'solve' it easily. Also, the political and socioeconomic, cultural, international etc factors are all very real. You cannot tip one without affecting the other.

I also think that the thing is, it is always easy to be the arm chair critic or the journalist with all the should-do and should-haves but as anyone on the field (any field from war to the McDonalds shift to the hospital to the office) will know reality is not square or simple like this.

I think people like this speaker use these opportunities to promote themselves -- just like that fool Donald Trump did when he was canvassing the Presidency (and thank God the world doesn't have to endure another idiot on the world stage for now) -- but my sense are these people are just opportunists and their ideas are just theoretical (and in this case, half minded) ideas, not genuine policy makers or strategists or people who are necessarily good for the populace. But I also understand that people feel a bit desperate and are willing to listen and look for alternative ideas and leaders. Caveat beware is all I am saying I guess.

IMO.
Abu

Diseria

OK... and so?

...may I also kindly ask why this was posted?

Floating_Abu

Diseria

(I think we just post things around as it's a chat forum and people are interested in different things so it's kind of fair play that way)

Just my opinion...

ozen

Thanks for sharing your view, Abu.

Floating_Abu

Thanks ozen

robot

The message is true. Anyone can see that if consumers can't afford new cars, the industry fails, and more people are laid off.
Tax policies are an election issue. It has to be kept simple for the voting public. The talk is tailored to the audience. That guy could probably sell the opposing view to a room full of CEO's.
It's politics.

Floating_Abu

Anyone can see that if consumers can't afford new cars, the industry fails, and more people are laid off.

Yep, but I think every single person knows this because it is obvious.

The reason why there is capital business investment is because the idea is that businesses hire employees who then get money.

I didn't watch the whole stream though and it also highlights IMO the whole system is kind convoluted because we are the world of consumerism, our true wheel of life and religion

Jason

My take on it (written about a week ago):

One of the key buzzwords this election season, much like it was during the last, is 'job creation.' The economy is all we ever seem to hear about lately, and politicians are jumping on the 'job creation' bandwagon in droves. House Republicans, for example, have a plan to spur job creation called "The House Republican Plan for America's Job Creators." As the title indicates, their plan for spurring job creation and economic growth focuses on the 'creators,' which unsurprisingly proposes, among other things, lower taxes and fewer regulations for businesses and the wealthy, since they're the obvious creators (read 'largest campaign contributors').

In the conversation about job creation in a predominately consumer-based economy, however, one important aspect often gets overlooked: consumers, which some see as the true job creators. Nick Hanauer, for example, a Seattle-based venture capitalist and one of the early backers of Amazon.com, suggests that consumer demand and spending is ultimately the real source of job creation, and that consumers (particularly middle class consumers) are far more responsible for job creation than capitalists like himself. In his own words from a recent (and controversial) TED talk:

I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.

That's why 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.

But even if one disagrees with this idea for whatever reason, I think it's hard to deny that this aspect of the economic feedback loop often gets ignored in the conversation, or at least underemphasized in comparison to the business side of the equation, the mythologized 'job creators'; and in my opinion, any remotely successful plan to spur job growth can't afford to ignore working-class consumers in favour of businesses. For all the rhetoric about lowering taxes on the wealthy and drastically cutting social welfare and safety net programs in order to promote growth, the data doesn't seem to support this as an effective strategy. As Hanauer continues on to argue in the talk:

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.

Since 1980 the share of income for the richest Americans has more than tripled while effective tax rates have declined by close to 50%.

If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. And yet unemployment and under-employment is at record highs.

While I don't think that all of our economic problems can be solved by simply raising taxes on corporations and the wealthy, I do think a critical look at the same 'trickle-down economics' that have failed time and again (e.g., in the 1890s, when they called it 'the horse and sparrow theory'; 'Reaganomics' in the 1980s, which Ross Perot called 'political voodoo'; etc.) is certainly long overdue.

Giving tax breaks and such to the wealthy actually allows very little to 'trickle down' to the average worker/consumer. The enormous amount of capital currently available isn't being used to create jobs so much as it's being hoarded or transformed into even higher record profits for the top 10%. They could use it if they really wanted to. Banks, for example, have plenty of money to lend; they're simply sitting on it. Same for large multi-national corporations. Whether it's out of fear of economic instability or whatever, lowering tax rates even more is like begging them to start doing something with their hoards of cash. We shouldn't be begging; we should be demanding—whether in the form of higher taxes on the wealthy and corporations, or more extreme measures like nationalizing banks in order to provide the much-needed liquidity for the economy.

person

Thanks @Jason very well stated as usual.

I think the point of the message is a pushback against the Right's emphasis on helping the wealthy to spur economic growth when in reality ordinary consumers contribute as much if not more to economic growth.

Jason

On a somewhat related note, Paul Krugman brings up a fairly decent (albeit obvious) point in his most recent op-ed originally made by John Maynard Keynes 75 years ago: that by pumping money into the system during slumps, the government can stimulate aggregate demand and help put people back to work in times of economic decline, and their subsequent spending will further help speed recovery. And conversely, that 'starving the beast' (i.e. the government) will most likely do little besides prolong and/or exacerbate the slump of an already depressed economy.

The bottom line is that austerity measures, particularly in combination with lower taxes on the wealthy and fewer regulations for corporations, ultimately hurt the working class and poor, eroding years of hard won gains by the latter while strengthening the former's capacity to accumulate more profit, as well as letting them off the hook for their greed and irresponsible behaviour. By "using deficit panic as an excuse to dismantle social programs," then, capital and the oligarchical ruling class have essentially found a way to utilize austerity measures as a means of privatizing gains and socializing losses under the guise of, ironically, fiscal responsibility.

lamaramadingdong

Henry Ford got it- he wanted his employees to make enough to buy his cars.