The Legend of the Job Creators

This is a post written by Avishai Shuter, and up-and-coming zoologist who lives in his parents house while trying to get a job with the Bronx Zoo.

I’m sure by now you’ve all heard about the class-warfare initiated by your friendly neighborhood super billionaire, Warren Buffett. Buffet has called on the government to start taxing him and his mega-rich friends a bit more in an attempt to make some sort of dent in the national deficit, which as you all know has reached see how much we could get for the Statue of Liberty in a yard sale levels.

The Republican Issue and Response

The issue, Republicans (aka FOX News) claim, is that if we start increasing taxes on millionaires of the country, we are in actuality taking money out of the pockets of job creators. Conservatives are apparently of the position that if the rich are taxed by even a fraction more, they will cease to create jobs for all the peasants depending on them for sustenance.

Wait, what? Warren Buffett even addressed this in his open letter. I’ve heard TV personalities argue this point by saying that the job creators, in actuality, often downsize in an attempt to increase profits. But this line of thought skips over a fairly obvious problem with the Legend of the Job Creators (movie rights still for sale).

The Rich Don’t Create Jobs

If you work for Apple, it doesn’t matter how much money Steve Jobs has. Your salary isn’t coming out of his pocket. The mega-rich often make their money by being in charge of companies (as well as personal investing of the money they’ve made), while the opposite is much more unusual. They’re on the company payroll as much as anyone else.

Now, I’m not denying that the mega-rich create some jobs (I’m sure Bill Gates has a small army of cleaning ladies sweeping his massive house. Hell, he could probably pay the US Army to do it), but I would be very interested to see what percentage of Americans are directly employed by these millionaires and multi-millionaires. My guess is not really enough to qualify them as Job Creators. For that matter, how many jobs does one have to create in order earn that title? How many families employ full-time housekeepers or gardeners?

Are they job creators? Do they qualify for massive tax breaks?

Additionally, as many have pointed out recently, the wealth of the top 1% of the country roughly equals the wealth of the bottom 50%. Now, while the net worth of the two groups may be the same, their effects on the economy are staggeringly different.

This is another obvious, though overlooked, fact. The larger group of people is going to have a larger affect on the economy as a whole (and subsequently on jobs) than the small, very wealthy, group. McDonald’s doesn’t make money because rich people buy their food, they make money because a lot of people buy their food.

The point I’m trying to make is that we don’t live and work within an economic system based on serving the rich. It’s OK for people to become very wealthy, and they shouldn’t suffer for it (although compared to the disappearing middle class, I can hardly call increased taxes on billionaires suffering).

But our economic system doesn’t, and shouldn’t, revolve around millionaires and billionaires. I’m not quite sure why conservatives are so adamant about turning less wealthy Americans into serfs, and I don’t see the reason for it. The top 2% aren’t separate from the economy, they’re part of it as much as anyone else.

9 Responses to The Legend of the Job Creators

  1. JT says:

    Efficient markets price taxes into the financial markets. Tax-free investments like municipal bonds offer a lower yield because people in high income brackets bid down the yields.

    To raise taxes would mean that companies would have to pay more money to attract investment capital. When companies pay more for investment capital, then there are fewer investment possibilities (employment possibilities) for everyone else.

    Rising tides raise all ships. It seems to me that the pro-higher taxes camp is fine with a lower standard of living for EVERYONE as long as it results in a smaller gap between rich and poor.

    The real story here is that 1% of people own 50% of the wealth. Maybe the lesson might be that owning things that produce wealth is a good strategy, and that even the poorest of the poor should consider following suit. Wouldn’t that make just as much sense?

    • JT says:

      There’s a very big difference between capital gains taxes and income taxes, btw.

      There’s also a very big difference between the top 1% and the top .1%. The top 1% of earners earn something like $400,000 per year. That’s four successful Subway sandwich shops, countless jobs, and economic activity. However, it’s still not Gates or Buffett status.

  2. Darwin's Money says:

    This is a rather naive picture of the situation. Conservatives or whoever you’re trying to trash rightly point out that most jobs are created by small business, not by the government (unless funded by debt my children will have to pay someday). These small business owners are often taxed as pass-through business entities and by raising taxes on them, you are, in effect, curtailing their ability and inclination to expand and hire. Liberals love the idea of “free money” so they can spend it. It’s a vicious cycle. We should be celebrating and encouraging small business owners, not vilifying them.

    • Avishai says:

      @Darwin’s Money, I agree. But I’m not speaking about small businesses. There seems to be a new cause within the Conservative camp, “protecting the job creators.” While this seems fair enough in theory, in practice, it translates into impossibly low tax rates for the wealthiest Americans.

    • Next says:

      @Darwin’s Money, Small business owners aren’t millionaires =P

  3. Bernard says:

    I believe the rich do create jobs AND keep the economy going. It may be directly or indirectly. Let’s take your example of Apple and Steve Jobs.

    I agree, people working at Apple are paid by Apple and not Steve Jobs. However, the success of Apple, for now, can be linked to the performance of Steve Jobs. Do you think Apple would be as successful today without him? Do you think those jobs would exist?

    Because of Steve Jobs, those jobs exist because he has boosted the value of Apple. Don’t believe me?

    The world just heard that Steve Jobs has stepped down as CEO. Apple’s stock has plunged 7%. How do you think that affects the rest of the world as far as jobs, retirement accounts, and technology.

    Steve Jobs probably doesn’t pay anyone wearing the Apple logo on their shirt. But, I think they should be very thankful for the value he brings, brought, to the table.

    His value created their job.

    • Avishai says:

      @Bernard, I understand that. I was just using Steve Jobs as an example because everyone knows who he is. He could be easily substituted for any of the hundred of CEO’s of giant companies who you’ve never heard of.

  4. We need a fair tax system — one where everyone contributes, and one that fits on a single page without a bunch of social engineering BS or special privileges.

    A system where the tax beneficiaries — whether they be poor or on wall street — outnumber the tax contributors is a system that will eventually fail.

  5. Interesting point about Steve Jobs. Maybe he didn’t directly create employment out of his own salary, perhaps, but without him we’d all be literally be billions of dollars poorer. An economy thrives on satisfying the desires of the consumer, and it’s ultimately *them* that pay for your salary.

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