So there has been this photo going around Facebook that allegedly shows why certain Republican beliefs are “Truths” that no one can argue with. But in fact none of these are ‘truths’ (whatever that means), and none of them are ‘facts’ that could be empirically verified because most of them involve values that would first have to be unpacked before verification (or falsification) could take place.
Questioning Point #1
For example, with reference to point #1, to actually investigate whether this was ‘true’ one would have to specify what one means by “prosperity” and people can actually disagree about how to measure prosperity. Is prosperity achieved at some absolute threshold or is it relative to what others have? If it is an absolute threshold, then one might disagree with point #1 by pointing out that the levels of taxation that are being proposed are certainly not sufficient to bring people below that absolute level.
In contrast, if one believes that prosperity is relative to what others have, then one has to specify that class of “others.” Are we only talking about ‘others’ within one’s own country or are we talking about ‘others’ across the world? Sticking with others within one’s own society, point #1 would be plainly false. If what it took for me to be prosperous were measured relative to what others in my society have, then lowering what those at the very top have would indeed make those at the bottom relatively more prosperous.
Questioning Point #4
With respect to point #4 many have disagreed with this ‘truth’ including several famous capitalists. For example, Henry Ford believed that the best way to multiply wealth was to divide it. Although Ford was anti-union, he thought that if he paid workers a wage that would provide them with a comfortable life, then this would provide them with the ability to buy the cars he was producing, and ultimately, this would lead to greater wealth for Ford himself.
Ford wasn’t exactly a socialist, yet he would argue (and could argue) with these alleged “truths.”
This argument seems similar to certain “truths” that have been repeated around American presidential campaigns lately. But some people disagree, and they do so in a reasonable way. Here is a video of Nick Hanauer at TED, for those of you who don’t like to read. For those of you who do, many of the Hanauer’s arguments, and a link round-up are written out below the fold.
Here is Business Insider’s take:
This treatment plan ignores two important things:
- The wealthiest Americans and corporations already have plenty of cash to invest.The reason they are not investing it aggressively is not that they don’t have it–it’s that the investments won’t produce a compelling return (because the customers of the companies they would be investing in, average Americans, are strapped).
- Contrary to common wisdom, rich people do not create the jobs in this country. Rich people (investors) help create jobs, but no sustainable job is created without the help of a healthy economic ecosystem–one that depends heavily on the financial health of hundreds of millions of American consumers.
The argument that “rich people create the jobs” is repeated so often that many people regard it as fact. (Source: Blodget)
As says Nick Hanauer:
Hanauer himself takes home more than $10 million a year of income. On this income, he says, he pays an 11% tax rate. (Presumably, most of Hanauer’s income is dividends and long-term capital gains, which carry a tax rate of 15%. And then he probably has some tax shelters that knock the rate down the rest of the way).
With the more than $9 million a year Hanauer keeps, he buys lots of stuff. But, importantly, he doesn’t buy as much stuff as would be bought if that $9 million were instead earned by 9,000 middle-class Americans each taking home an extra $1,000 a year.
Because, despite Hanauer’s impressive lifestyle — his family owns a plane — most of the $9+ million just goes straight into the bank (where it either sits and earns interest or gets invested in companies that ultimately need strong demand to sell products and create jobs). For a specific example, Hanauer points out that his family owns 3 cars, not the 3,000 that might be bought if his $9+ million were taken home by a few thousand families.
If that $9+ million had gone to 9,000 families instead of Hanauer, it would almost certainly have been pumped right back into the economy via consumption (i.e., demand). And, in so doing, it would have created more jobs.
Hanauer estimates that, if most American families were taking home the same share of the national income that they were taking home 30 years ago, every family would have another $10,000 of disposable income to spend.
That, Hanauer points out, would have a huge impact on demand — and, thereby job creation.
It’s time we stopped mouthing the fiction that “rich people create the jobs.”
Rich people don’t create the jobs.
Our economy creates jobs. (Cited in Source: Blodget)
Individuals don’t create jobs to the same extent as certain economic conditions create jobs. Republican rhetoric is trying to have it both ways. On the one hand they attribute job creation to individuals, in which case government policies should have little effect. On the other hand, they attribute job creation to their own government policies, which admits that economic conditions are important for creating jobs. But this is inconsistent with the rhetoric of individual job creators.
Henry Blodget “Here’s the Real Problem with Mitt Romney’s Economic Plan: It’s Not “Rich People” Who Create Jobs,” Business Insider, August 8, 2011.
Henry Blodget “No, Entrepreneurs Like Steve Jobs Do Not ‘Create Jobs’ By Inventing Products Like The iPhone” Business Insider, December 12, 2011.
Video of Nick Hanauer at TED