"Capitalists = Job Creators" is Completely Wrong

[Jacob]

Just shows how interesting discussions can come from abandoning the most absurd polemical starting premises, with the usual (and unsurprising) exceptions. 

Thank you for taking the thread in a constructive direction

[Jacob]

It's sophomoric extension of the chain of causality.  It would make as much sense to say that it's neither consumers nor capitalists, its mothers who create jobs by giving birth to people who demand goods and services.  Or it's employers who create demand by paying people.

As Haiku alluded to, demand doesn't automatically create a job.  I would like to eat some Ethiopian food for lunch, but no one is reading my mind and rushing to cook it spontaneously.  Someone somewhere has to make a prediction/guess about demand, assume some risk, put his money and time on the line, and hope that the demand materializes.

You're right, of course.

I'd say that the function of capital in a well-functioning economy is to identify unserved demand and unrealized efficiencies and to address those in the pursuit of profit. This certainly can (and does) generate jobs, but it is secondary to the pursuit of profit. Certainly, we should encourage private capital to be deployed in ways that create jobs, but if we go too far we end up with the inefficiencies of planned economies.

I also think it's pretty uncontroversial that to say that a large, economically secure middle class with disposable income drives demand of existing goods and services and is also a pretty good market for capitalists to identify new demands and efficiencies in servicing. It seems to me that the

Additionally, I believe we can also agree that wealth is created as capital circulates rather than when it accumulates and sits unproductive. Capital has to work, so to speak.

So if we're looking at improving any given economy, we have to figure out what it is that's holding it back. Are there restrictions that prevent capital to be applied to inefficiencies or unserved demands? In many places and times, that's definitely the primary problem (in Communist economies, for example) but is it in the US? Personally, I don't think so. Of the things that is undermining confidence and consumer demand from the middle classes, are there any that are addressable in the US? I think so, but I don't think that income tax on the most wealthy is one of them.

[Berkut]

. Of the things that is undermining confidence and consumer demand from the middle classes, are there any that are addressable in the US? I think so, but I don't think that income tax on the most wealthy is one of them.

Jake, I thin this is a very key point, and one I agree with completely.

The idea that the wealthy are anywhere near the point at which their taxes are stifling their positive contribution to the economy is simply crazy.

On the other hand, I don't think we can solve our deficit problem simply by jacking up taxes on the rich. There isn't even close to enough money there.

[CountDeMoney]

On the other hand, I don't think we can solve our deficit problem simply by jacking up taxes on the rich. There isn't even close to enough money there.

Too bad you see increasing and replacing lost revenue streams as "simply" the only option the left is promoting, and you and your jackboot racist GOP thug buddies on the right would prefer seeing "simply" reduced spending as the solution.  Needs to be both.

[dps]

. Of the things that is undermining confidence and consumer demand from the middle classes, are there any that are addressable in the US? I think so, but I don't think that income tax on the most wealthy is one of them.

Jake, I thin this is a very key point, and one I agree with completely.

The idea that the wealthy are anywhere near the point at which their taxes are stifling their positive contribution to the economy is simply crazy.

On the other hand, I don't think we can solve our deficit problem simply by jacking up taxes on the rich. There isn't even close to enough money there.

Even if increasing taxes on the wealthy were the solution to the problem, simply increasing the income tax rate isn't going to do the job.  The real reasons the very wealthy pay such an effectively low income tax rate isn't because the top tax rate is so low, but rather because they have so many tax loopholes available to them.

[OttoVonBismarck]

I haven't read the article, but I've read the Languish response to the article which I feel is just as valid a use of my time.

First, a brief history of "jobs." When people think of jobs right now they think of some task or labor they are paid currency to perform, they use the currency to satisfy their basic needs and to buy things they want. Ideally. (Some people need government assistance on top of their job to even fulfill their basic needs, but that's a side issue.)

Traditionally jobs like that mostly did not exist. On the fringes there have been people with "jobs" like that since the ancient time, but they were a super small portion of humanity. Instead historically some 90%+ of humans first worked in agriculture to satisfy their need for food, and in their spare time would erect shelter and make clothing. A small portion of humans would be responsible for protecting the agriculture workers from raiding bandits who sort of lived as parasites. This portion of humans would take from the agricultural workers a portion of their produce, so that they could eat without having to work fields for it. That basic model is true for most of the history of civilized humans. When you read about the Roman Empire, the Middle Ages, the Renaissance, you're really often reading the history of the 10% of people who didn't live in that model. But the truth is up until the late 19th century the overwhelming majority of humans spent the overwhelming majority of their time making enough food for themselves and then a bit of surplus so that the ruling classes could skim it off the top and live without having to work the field.

The industrial revolution went hand in hand with the agricultural revolution (which doesn't get as much press but was by far the more important revolution), this created a situation in which non-upper class people could accumulate more wealth, consumer goods and etc. This did other things too, like require farm workers to find other ways to make a living and for the first time larger numbers of people were working a "job" which paid a wage which they could then use to fill their needs and some of their wants. This initial spurt of job creation definitely happened because of capitalists, capitalism was key to the creation of the first large industrial ventures and the organizational and financial principles of capitalism allowed complex operations with large shared risk to pop up.

However, some people get confused here and start thinking the purpose of a capitalist is to create jobs. That is not the case. Capitalists exist to move capital and allow capital to be focused from many sources into one, in simpler economies there was no easy way to raise capital or to scale projects up or to pool resources.

Early capitalists didn't focus on creating jobs, that was just a side effect. They focused on producing products that people needed. People needed better light sources than whale oil, so capitalists started mass producing kerosene. The demand for lighting had always been there, but was only semi-efficiently satisfied. People had a demand for travel and transportation faster than walking or horse, so railroads were laid and ran by capitalists. The demand for transportation is as old humanity, but capitalists found a way to satisfy it more efficiently. Efficiency and technological progress generally create wealth which leads to more free time, more discretionary income and etc.

Obviously without demand for things there are no "jobs", but there is built in demand that comes with humans as a species. Capitalists more efficiently fill those demands, and they do it in a way that generates wealth which allows more demands to be filled by more people which creates greater need for production, management, etc which creates need for labor.

[OttoVonBismarck]

But yes, technically capitalists don't really create "jobs." Jobs are created because people desire a way to accumulate possessions and fulfill needs without having to do the actual work of creating the items or filling those needs themselves.

[Admiral Yi]

Even if increasing taxes on the wealthy were the solution to the problem, simply increasing the income tax rate isn't going to do the job.  The real reasons the very wealthy pay such an effectively low income tax rate isn't because the top tax rate is so low, but rather because they have so many tax loopholes available to them.

The overwhelming bulk of the explanation for lower average taxation of the rich is the lower rate on capital gains and dividends than on earned income.

"So many loopholes" is Obama class warfare talk.  It's wrong and dishonest.

[CountDeMoney]

"So many loopholes" is Obama class warfare talk.  It's wrong and dishonest.

"Class warfare" is GOP rich guy talk.  It's wrong and dishonest.

[Habsburg]

"So many loopholes" is Obama class warfare talk.  It's wrong and dishonest.

"Class warfare" is GOP rich guy talk.  It's wrong and dishonest.

And transparent.

[The Minsky Moment]

Hanauer's presentation that "the rich" only pay 15% taxes and the middle class pay 30+% was also downright disingenuous.  Those funds taxed at 15% are taxed at 15% on top of the 35% corporate profit rate.

Plenty of ways around that.

[Neil]

Class warfare is a legit phenomenon, but I don't think talking about a simplified tax code is it.

Assholes banning foxhunting is class warfare.

[Admiral Yi]

"Class warfare" is GOP rich guy talk.  It's wrong and dishonest.

Then how would you like to characterize Obama's "taking advantage of loopholes" talking point?  An honest mistake?  Misunderstanding of the tax code?  A bright, shining truth?

[Jacob]

"Class warfare" is GOP rich guy talk.  It's wrong and dishonest.

Then how would you like to characterize Obama's "taking advantage of loopholes" talking point?  An honest mistake?  Misunderstanding of the tax code?  A bright, shining truth?

A signal that he thinks the tax code needs to be changed, so that the very rich pay more tax on their income from various sources.

[Habsburg]

Class warfare is a legit phenomenon, but I don't think talking about a simplified tax code is it.

Assholes banning foxhunting is class warfare.

I am just glad California has banned Foie gras.  MoFos force feeding 3 month old Duckys and Goose 

I hope the Great State of Washington follows soon.