Venture capitalist says: the rich don't create jobs, the middle class does

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    Dec 01, 2011 11:38 PM GMT
    As much as I agree with him, we still need better credit card balances in consumers before you consume more and more (which is exactly why we need things like payroll tax cuts now):
    http://www.bloomberg.com/news/2011-12-01/raise-taxes-on-the-rich-to-reward-job-creators-commentary-by-nick-hanauer.htmlI’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)

    Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.

    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 the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
    ...
    One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.
    ...
    I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

    If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.


    Hm, interesting thought: have rich people buy 3000 shirts every year. No need for laundry.icon_lol.gif
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    Dec 02, 2011 1:08 AM GMT
    But his point is correct and it's the downfall of all greedy douche bags. Once you've eliminated your market, you have no one to buy your products and services, so you're screwed. It also explodes the myth of some wily entrepreneur who "created" his wealth from thin air, rather than having had a good idea or created a good product so people gave him their money earned through their labor, of which he kept a portion.
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    Dec 02, 2011 1:14 AM GMT
    Its all explained in this video.