How the 1% Destroys Jobs and the Real Heroes are Everyday People

Mitt Romney & Co. want us to think that making the rich richer will create jobs. That’s not true. And it’s not the American way.

For three decades, we have been told that “trickle-down” economics that benefit the wealthy is the key to creating jobs. But that’s baloney. The evidence shows that ordinary people, not the rich, are the real job creators.

Conservatives like to promote a simplistic view that all you need are capital (cash or goods that produce income) and entrepreneurship in order to create wealth. They maintain that wealth, in turn, spurs rich people to do productive things, like creating jobs, and so the more concentrated wealth is, the more jobs are created. If you tax the rich, they argue, then jobs will be destroyed. Mitt Romney frequently echoes this line of thought by promoting economic programs that would give enormous tax breaks to the wealthiest 1% and concentrate wealth in their hands. Romney, who paid 13.9% in taxes in 2010 and likes to tout himself as a job creator, has just announced a plan that calls for preserving the Bush tax cuts for the wealthy, lowering the corporate tax rate, and repealing the estate tax.

Turns out, this ‘trickle-down’ mythology it is horribly wrong, and the 99 percent has paid for it. There’s a reason why the Wall Street Journal acknowledged that George W. Bush, the last trickle-down president, had the worst job creation record in U.S. history. So before we consider having another trickle-downer in the White House, let’s talk about the failure of this idea and why if you want to see a real job creator, you should look in the mirror.

Who Really Creates Wealth and Jobs?

Let’s start with the first contention – that capital and entrepreneurship are all you need to create wealth. At best, this is a half or quarter truth. Capital and entrepreneurship are certainly factors in the creation of goods and services in our economy, along with labor, resources, technology and social capital, among others. But they are by no means the most important factors. The most important factor in the whole list is labor – the human beings who create products or offer services and are paid in wages.

If you really want to see a wealth creator, just look at the grocer, the nurse, the software developer, the accountant, and the civil engineer. They are all creators of wealth. Chances are, you are a wealth creator.

And remember, creating goods and services is just half the story in producing wealth. Right now, businesses are far less worried about a lack of cash than a lack of confidence that consumer demand will pick up in the future. Unless there is consumer demand, there is no production and no wealth at all. No one is going to make a new MP3 player unless people want to buy it and have the money to make purchases. In this sense, consumers are job creators, too.

As Nick Hanauer, founder of Second Avenue Partners, recently told Bloomberg:

“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.”

In other words, job creation is related to demand. When regular people have spending power, they demand products and services, which leads to more jobs for others to make the things they want.

Does Making the Rich Richer Create Jobs?

Conservative economic policies are often aimed at concentrating wealth into the hands of the few. Does that create jobs? If you look at the Congressional Budget Office’s analysis of income distribution in the U.S. through 2007, you can see that the concentration of wealth in the 1 percent has reach a 100 year high, and that the concentration of wealth has really taken off in the last couple of decades.

So why didn’t job creation take off, too? The fact is that whatever role of capital plays in job creation, concentration of wealth is not necessary – and may even be counter-productive. In a modern economy, capital comes from a variety of sources including internal funds of corporations, the banking system, and the financial markets. Rich people really only play a substantial role in the last source – financial markets. When more and more money is funneled into the hands of the rich, they tend save and invest in financial assets, rather than in job creating businesses. Concentrated wealth has been directly associated with causing wages in America to stagnate and has resulted in wealthy people shipping jobs overseas to improve their personal profits. In reality, it has been a job destroyer.

The rich have largely gotten richer through an explosion in the compensation of CEOs and other high ranking corporate officials – which the very same people who controlled publicly held companies in the U.S. awarded to themselves in the form of outlandish “performance” bonuses. The companies justified these levels of compensation to their shareholders and to the public by relying on increases in the price of their companies’ stock and the corresponding increase in shareholder value of their companies. And, indeed, the period starting in the 1980s corresponded to an historic bull market run in U.S. stock markets.

The single most important factor determining the level of stock prices is corporate earnings. That’s why the historic increase in stock prices also corresponded to the highest recorded levels of corporate profits in U.S. history. And how did corporate management in the U.S. increase corporate earnings during this period? By strictly controlling labor costs, the biggest single factor in the cost of production. The corporateers held down labor costs by subjecting U.S. operations to foreign competition and by outsourcing production to foreign countries. So, at the same time that corporate compensation was sky- rocketing, salaries and wages to rank and file workers were stagnating or declining. As an economist might say, the economic return to capital went up at the expense of economic return to labor. Corporate chieftains cleverly camouflaged the situation and made it more palatable to shareholders and regulators by paying the bonuses in the form of stock options which corporate management liberally priced (in many cases after the fact, illegally and adversely to the interests of then-existing shareholders ) to take full advantage of stock market increases.

Bottom line: Rather than creating jobs and raising all boats, all this ‘trickle down’ economics has benefited the 1 percent only – and tends to sink everybody else. That’s why the rich are now flush with private jets and more money than they can possibly spend, while ordinary Americans have been left with flat wages and food stamps.


America’s DNA

So why does the trickle-down myth hang on? President Obama recently suggested it’s because this fairy tale “speaks to our rugged individualism and our healthy skepticism of too much government.” The President thought that this was “in America’s DNA.” But the President seems to have forgotten that Roosevelt’s New Deal, a series of programs designed to promote economic equality and benefit ordinary people rather than the rich, was the most popular political program in the history of the United States. If we remember that, it becomes very clear that there is something else in our DNA — a sense of fairness and a notion that the hard work of honest citizens is worth more than fatcat financiers hoarding resources and shipping jobs overseas.

We are not a country of aristocrats and peasants who labor at their pleasure. We are a country of proud and free citizens whose labor, investment, and ideas really drive the American economy. Not Mitt Romney’s latest Goldman Sachs windfall.

http://www.alternet.org/economy/154153/h...ple?page=entire

I agree with you both..


but maybe it is time for some protests. Protesting the injustices that have been present in the American economy especially in the past 25 years and maybe people will actually pay attention and things might change. One thing is for sure, something has to give cause our current trajectory is unsustainable.

"Pitting Americans against Americans" my ass. Give me a break.

How is this any different from every other election? Hell every election pits Americans against Americans. Specifically tactics used to win votes? FDR in 1940 practically called out his domestic Isolationist opponents as unwitting (or closet-case) Nazi supporters. Reagan ran against not just liberals, but their system, Dubya and the GOP ran state referendum efforts against gay people before the '04 elections. Yeah LBJ signing the Civil Rights Act of 1964 pitted Americans against each other!

Besides, I thought we all agreed the Buffet Rule was a smoke screen? I always thought, still do in fact, that it was simply a tactic to play up Mittens' inherent Gordon Gecko-ness.

Calm down. You're not a socialist or Joe Stalin's cousin for thinking that Rule is cute.

Personally I'm voting against another Iraq/Afghanistan that we'll get next year if Gordon Gecko wins. At least with my vote, there's a chance that it might not happen.

Or might still even this summer get if the latest rumors are accurate.

Hey Ronnie,

Save your anger for someone who deserves it. WTF??

Unlike you, I've lived a little bit. And unlike you, I grew up in an urban environment where we were encouraged not to go to fucking extremes, and I firmly believe that no politician is perfect simply by virtue of his/her party affiliation. I was a registered Democrat before you were even a thought, son.

Re-read my post. I stated that Obama doesn't want people to think that he's pitting Americans against Americans. Not that he was guilty of it.

Christ alfuckingmighty, the guy still has my vote. But if people disagree with him in even the slightest way, you practically accuse them of treason. Grow the fuck up.

I don't like Obama's class warfare strategy because I don't care about other's compensation or what others pay in federal income tax. By some standard, I am a fat cat. So, I imagine I could take a hit if Obama's tax strategy gets through Congress.

As I've stated elsewhere, the US economy is so gigantically complicated that to expect a President to fix it is ludicrous. However, I do expect a President to refrain from strategies that pit one segment of American society against another.

It's a way of mobilizing the anti white male voters. "The top 1%". When you hear about them you think of a white male who lives on Park and 67th or waterfront property in Palm Beach County or wherever. Athletes and movie actors are exempt. People are outraged that Romney pays 15% cap gains but NY is broke and no one complains about all the Yankees who are tax refugees living in Tampa, like Jeter.

You have higher expectations than our democratic system deserves.

Paging John Kerry, paging John Kerry.



I could see that prospective First Family have a friendly competition with the UK Royals.

USA! USA! USA!

Giuliani endorsed Mittens today.

I know. Big whoop .

Every candidate does some version of this. The question is since Romney already has a rep for insincerity among his base, will the normal post primary moves to the center hurt him?

Etch-a-Sketch

Eh?



http://2012.talkingpointsmemo.com/2012/0...?ref=fpnewsfeed

Is it 1985 again?

Rambo, what mean expendable?

Those pesky Soviets.

The Soviets (and now the Russians) have waited a long time for this. They will now have a monopoly on ice harvesting. Thus, they can bring the US hospitality industry to a standstill.

So Senator McCarthy was right after all. I knew it.

For all the Obama-lovers here, don't shoot the messenger. Just posting the article and the "demotivational" poster below, which I thought was pretty good. For the record, what he's done in terms of anti-terrorism is probably the biggest thing I give him credit for since he's been in office.



SEALs slam Obama for using them as 'ammunition' in bid to take credit for bin Laden killing during election campaign
By TOBY HARNDEN
April 30, 2012

http://www.dailymail.co.uk/news/article-...n-campaign.html


http://www.youtube.com/watch?v=BD75KOoNR9k

First Obama gets criticized by Ed and Malkin in 2008 for saying he would attack targets in Pakistan without their permission if he had good intelligence that there was a high value target. Then we hear that that Afghanistan is Obama’s war now. Now that there is good news we are supposed to credit Bush. It’s really just a partisan talking point.

I have followed the entire Bin Laden operation very closely, and am very well versed on the minor details. Osama bin Laden was found because the United States military exploited actionable intelligence extracted by subjecting terrorists to enhanced interrogation techniques (EITs) in secret CIA prisons, by questioning enemy combatants at Guantanamo Bay, and by capturing a top al Qaeda source in Iraq.

As long as some people remain intent on keeping political score, it must be pointed out that all three sources of these indispensible data points were direct or indirect results of Bush policies – EITs, Gitmo, and the Iraq war – that much of the American Left, including Barack Obama, fought tooth and nail.

I see a parallel between Obama’s decision to go after Osama and Bush’s decision to go after Saddam:
-Both relied on CIA & other intelligence
-Neither WMDs nor Osama were guaranteed to be there
-Both men were taking big risks based on the best available intelligence.

The fact that one is vindicated and one is vilified for making a difficult decision at the time speaks to the luck involved with hoping you made the right call.

By that reasoning you have to put Jimmy Carter's failed attempt to rescue the Iran hostages in the '70's.

Anybody followed the gay Romney spokesman who was (allegedly) forced to resign because of the religious right's pressure?

Gay GOPer asks: Why didn’t Romney stand up to right’s attacks on Richard Grenell?



http://www.washingtonpost.com/blogs/plum...NZlwT_blog.html

Then I read this, as being claimed by Andrew Sullivan, which I'll take with some salt. (Remember his fixation on the Trig Palin conspiracy?) But as he claims, Grenell as the foreign policy spokesman/expert, himself set-up a media call on the subject and allegedly was totally muffled by Team Mittens in response to the right-wing complaints. There only to be seen, not heard.



http://andrewsullivan.thedailybeast.com/...rter-asked.html

This story won't be remembered in detail 3 months later, but I truely think Mittens was given an opportunity disguised as a shit storm of which he could've turned into an emerald cloud, and instead he's covered in manure with no benefits except pleasing the same group of assholes who were going to vote for him in the fall. Like they would've bolted for Obama.

He's the fucking nominee. He won that fight. Allegedly he's supposed to pivot to the center in the next few months, and he took a wrong turn.

Imagine if he had let that spokesman do his thing, total redmeat on foreign policy in response to Biden's recent comments. Alot of those same right-wingers bitching would've felt comfort that in spite of that "problem," this guy with his FP opinions makes him one of the boys.

Or better yet (if self-admittedly unrealistic), Mittens would've released/given a statement to the effect that to fire Grenell would insinuate that he had done something wrong, and he hadn't. Sure Grenell as a gay American is for marriage equality, but a minority of Republicans are too.(Including Dick Cheney and Ted Olsen) We're a broad political coalition. We won't agree on every single little thing, just the broad big picture. It's why we had both Evangelicals and Gay Republicans. Besides that disagreement is pure tangental to foreign policy. Will being straight make Iran quit building a bomb? I picked him because we both agree on our alternative foreign policy to that espoused by the White House. We're not Tehran, we're goddamn America. We're all different.

This might've given an impression on independent/moderate voters that Mittens is about results, not methods. Conservative, but tolerant. It would've won at the least my personal respect, even if I ultimately won't vote for him. I'm sure I'm not the only one. It also would've possibly dampened, even castrate two core themes of attacks Obama is using: (1) Mittens is an extremist (and homophobic), and (2) he's a spineless pussy who's unwilling to stand-up against his party's base.

Instead, Mittens publicly confirmed both stereotypes. Even if he isn't a homophobe, then he gives off the impression that he's a coward unwilling to back up his own people. Obama pissed off his own base with the tax deal he cut with the GOP in '10. Dubya pissed off his own base with his failed attempts at immigration reform. Would Mittens even have the fortitude to attempt either? This raises that question.

For an expected close race, every layup matters.

Kevin Williamson at NRO is of the mindset as me on this:




http://www.nationalreview.com/corner/297455/exit-pursued-elephant-kevin-d-williamson#

Agreed 100%. I am already so sick of the "hore race polls" that come out every other day. Its almost seven months till the election, which s an eternity in politics.

Well, you can save yourself alot of aggravation by realizing that polls are snapshots in time the results of which can persist, but only if the basis for poll responses persists.

Pretty much.

Obama is 51% at Gallup. We've got 6 months to go (and those will be a loooooong 6 fucking months), but considering the unemployment rate and Europe and facing now the most "electable" Republican...not bad.

If Santorum or NEWT(!) had been the nominee, Obama's % would've been at least 55%.

Memo to Mittens: Before you hitch yourself to a band wagon on a story, like you did with that China situation, you should check to make sure there is an actual wagon there to hitch you drive off.

So if Kerry got swiftboated, did Romney get gayboated today?

The phony smile and dismissive "I was such a jokester" line isn't going to take the legs off this story.

What's interesting is that one of Romney's fellow bullies in the incident has written how this incident caused him deep regret and troubled him to where he approached and apologized to the victim years later, and the victim reportedly admitted that he had been troubled by it over the years. Yet Mitt has a free conscious...so much so that he can't even remember it. I guess it was just one of many incidents for the prankster.

Bottom line is he was a spoiled rich kid. And as a man he is an outright liar. Of course he remembered this incident.
He's probably a homophobe too.

That smile made the story worse.

All this shit just makes what he did last week even more transparent and despicable, doesn't it?

He didn't bother to save his gay foreign policy spokesman because he was terrified of the base to the point of browning his pants. No he might've actually agreed with them that no gays should be within his government. Of course if that's the case, this begs to question why he even hired him in the first place. (Token hire? Window Dressing? Secret Lovers?)

Very true. I can remember every time in my life that I held somebody down against his will and hacked off his hair...because I thought he was "different."

Romney is creepy.