Nick Hanauer "Rich people don't create jobs"
- Thread starter aleks
- Start date
The same guy has a more recent 2014 talk available on TED (I haven't watched it yet). From the TED bog: "The talk was terrific: honest, surprising and important. I'm proud to be posting it today."
It's here along with some backstory on the controversy with the original presentation: http://blog.ted.com/how-did-nick-hanauer-get-onto-teds-home-page/
It's here along with some backstory on the controversy with the original presentation: http://blog.ted.com/how-did-nick-hanauer-get-onto-teds-home-page/
aleks said:
Easy solution then, take the money from the rich and make everyone middle class. :/
He's got it completely upside down and advocating one of the worst possible policies imaginable. Consumers don't create jobs in any shape or form. Producers create goods and services for people to consume. Only by increasing production can people be in a position to obtain a greater quantity or quality of food, clothing, cars, housing etc. Only by increasing production can poverty be alleviated.
An economy is driven only by real, value adding supply. Nothing else.
By definition you cannot consume what has not already been produced.
The "feedback loops" etc that he is alluding to are the signals back from consumers to producers about whether or not the things they offered to the market were in fact deemed to be useful or of value. Consumers thereby govern (through their purchases) whether more or less of the things producers are offering is desirable, and through the profit motive, producers thereby respond.
In terms of whether or not it is the middle class or the rich who "create jobs", he is largely missing the point. All people are in effect creating their own jobs by offering their labour in the production of a variety of goods or services in exchange for the fruits of other people's labour. Whether the fruits of your labour offering has value to others in society is determined by others buying and consuming those fruits. If what you are offering is not wanted or deemed valuable at the time, then you either won't be able to sell your fruits (and hence won't have a job) or you'll only be offered a relatively low pay compared to the offerings from other people.
Those who are offering the goods and services that are of the greatest value to others in society (either in terms of high $$ per unit produced or high volume per $ margin) will typically be "the rich". This includes offering systems of coordinating the work of others to produce things more effectively or efficiently (such as Henry Ford and the assembly line).
An economy is driven only by real, value adding supply. Nothing else.
By definition you cannot consume what has not already been produced.
The "feedback loops" etc that he is alluding to are the signals back from consumers to producers about whether or not the things they offered to the market were in fact deemed to be useful or of value. Consumers thereby govern (through their purchases) whether more or less of the things producers are offering is desirable, and through the profit motive, producers thereby respond.
In terms of whether or not it is the middle class or the rich who "create jobs", he is largely missing the point. All people are in effect creating their own jobs by offering their labour in the production of a variety of goods or services in exchange for the fruits of other people's labour. Whether the fruits of your labour offering has value to others in society is determined by others buying and consuming those fruits. If what you are offering is not wanted or deemed valuable at the time, then you either won't be able to sell your fruits (and hence won't have a job) or you'll only be offered a relatively low pay compared to the offerings from other people.
Those who are offering the goods and services that are of the greatest value to others in society (either in terms of high $$ per unit produced or high volume per $ margin) will typically be "the rich". This includes offering systems of coordinating the work of others to produce things more effectively or efficiently (such as Henry Ford and the assembly line).
By definition, policies that encourage real, value adding production will benefit others. The current crop of "rich people" are simply those who have demonstrated that, to date, they have been the most successful in serving the interests of their fellow men. In general, they are the most likely to continue to do so in the immediate future and to disincentivise them is contrary to the goal of alleviating poverty for the masses and increasing the living standards of all who are engaged in the market economy.L.V. Mises said:
FlashInThePan
Member
Unique video given it is from a "rich" business man advocating some truth to the lie that would make him unpopular with many within the 1%.
What I took home:
Business benefits from a strong middle class and is the driver of employment.
Some extrapolations:
1. It is inordinately easier for business to grow in the short term by favourable environmental settings such as reduced tax obligations.
2. When the middle class is hurting so does business and more importantly democracy itself.
3. With a damaged middle class in debt and less able to participate in self representation, business interests gain the ear of govt. over the people.
4. A fascist order takes over and begins to prey of the middle class and continue to expand ways to benefit from predatory arrangements.
What I took home:
Business benefits from a strong middle class and is the driver of employment.
Some extrapolations:
1. It is inordinately easier for business to grow in the short term by favourable environmental settings such as reduced tax obligations.
2. When the middle class is hurting so does business and more importantly democracy itself.
3. With a damaged middle class in debt and less able to participate in self representation, business interests gain the ear of govt. over the people.
4. A fascist order takes over and begins to prey of the middle class and continue to expand ways to benefit from predatory arrangements.
Poor people can create their own jobs. In essence, they offer their skills to others at a price others are willing to pay.yennus said:
As Silver Pauper said make yourself useful to others and stop looking for a job and start looking for work.
If you are in a complex economy with few skills, then it is likely that you'll be able to obtain a better income by working for someone/company that has figured out how to provide goods and services that others want (ie someone else will employ your labour in conjunction with their own labour and capital in their own project).
As people typically make things before they sell them, to employ someone else in your project requires you to be able to pay them before you've been paid by the eventual consumers. Hence, in general, poor people don't have the saved resources to be able to create a job for others. This is where capitalists come in. They have saved some of the fruits of their past labour (grain, steel, cement, clothing, tools etc) and rather than consuming them themselves they are investing them into building a new project. Without savings nobody can employ anyone else for speculative projects. And again, those people currently with the most capital are those who have proven that they have what it takes to successfully undertake intertemporal wealth creation. Policies that steal these savings from them and redistribute them to the current poor people looks like it is helping the poor people (because now they have more grain, steel, cement, clothing, tools etc than they did before) but in reality it is only temporary and is actually destroying future growth. It is overeating from your small herd this season at the expense of accumulating additional breeders and a larger future herd by savings and investment.
FlashInThePan
Member
willrocks said:
Yes that would be detrimental to business that usually engineer for a specific design life. This would require a different economic model, one not based on growth for self enrichment.
The "sustainability' blurb we get constantly is a lie because the economic model we use can not allow it and nothing is self sustaining, everything requires an input of some kind. Hence the ability to tax and charge on the inputs.
-1 Consumers do not create jobs. They destroy the fruits of people's labour.willrocks said:
You grow grain. A miller makes flour. A baker makes it into yummy bread. I turn it into the brown log floating in the toilet.
You grow cotton. A weaver makes cloth. A fashion designer and seamstress make clothes. I go play footy on Saturday and get it stained and torn.
etc.
You grow cotton. A weaver makes cloth. A fashion designer and seamstress make clothes. I go play footy on Saturday and get it stained and torn.
etc.
bordsilver said:
So the farmer gets paid by the miller, the miller gets paid by the baker, the baker gets paid by the consumer, the consumer gets paid for providing some other service.
If the consumer wasn't there the farmer, miller, and baker wouldn't get paid, and therefore wouldn't have the capacity to employ others.
My comment was about showing how the consumer destroys the fruits of other people's labour. It is the difference between classing something as consumption versus intermediate value adding (which if you wish to get more complicated, the baker is not only value adding the flour she converts into bread for sale, but is also consuming any excess flour that falls onto the floor or which she converts into bread that she eats herself or which she bakes but throws out etc).willrocks said:
How does the consumer pay for it? By providing their own goods and services to others. So they may service the machinery used by both the baker and the farmer. A mutually beneficial trade of goods and services between all participants of the market, none of which are consumed before they are produced. Consumption guides producers about whether or not what they are producing is good in exchange for the services that they themselves are providing to others. Consumption does not cause production. Rather, everything that is produced is consumed (even if only by the baker themselves as per my above example). Supply is demand. Demand does not cause supply.
Hence, through my purchasing decisions I (and other consumers) may guide the baker toward producing more bread with raisins in it because they find that all raisin bread they make sells out every day compared to plain bread even though it is priced 20c higher. As long as the higher price is at least enough to pay for the raisins, then the baker is incentivised through profit to increase the production of raisin bread. But they simultaneously reduce the quantity of plain bread that they offer to the market. Why? Because in the absence of an increase in the amount of flour available to the baker there is a constraint on what they can physically produce at the current production potential of the economy. If the farmer can increase yield and the miller and increase the processing rate (ie if supply increases), then, and only then, can the baker decide to increase the total production of bread. It doesn't matter if people are starving in the streets. It doesn't matter if there is a surplus of chokoes and a deficit of bread. The demand for bread does not bring it into existence. Only an increase in the supply of all the required inputs can bring about growth in bread production.
Demand is in infinite wish list of things. Supply of this wish list is always constrained. But, via the invisible hand, consumption guides the reallocation of resources from less valuable uses towards better valuable uses within any given set of possible production sets.
In a market economy, people are "paying" for goods and services with other goods and services. Division of labour and specialisation increase the total amount of goods and services that are available to the group (via efficiency improvements) and by trading with each other, we are all better off than if we tried to produced everything individually. Consumption is the end point, not the starting point.
In a cyclical system, aren't start and end point are the same?
Some products fail to be sold, leading to waste instead of consumption. Inefficient use of labour or materials is also waste, but a form of waste that has consumed the hours or materials.
Innovation allows value to be added to materials through directed and skilled labour. This creation of value offsets the waste of inefficiency elsewhere in the system.
If this innovation is used to increase durability and longevity, the "waste" of consumption is reduced and the system derives greater benefit per unit of resource.
Unfortunately where the system operates under a policy of fiat growth, cheap labour and non-subsidy of education, we end up with more consumption, more waste, less innovation, a reduction of available resources and less quality products. A few people get ridiculously rich though.
Some products fail to be sold, leading to waste instead of consumption. Inefficient use of labour or materials is also waste, but a form of waste that has consumed the hours or materials.
Innovation allows value to be added to materials through directed and skilled labour. This creation of value offsets the waste of inefficiency elsewhere in the system.
If this innovation is used to increase durability and longevity, the "waste" of consumption is reduced and the system derives greater benefit per unit of resource.
Unfortunately where the system operates under a policy of fiat growth, cheap labour and non-subsidy of education, we end up with more consumption, more waste, less innovation, a reduction of available resources and less quality products. A few people get ridiculously rich though.