Who really creates jobs in America?

Nick Hanauer, a venture capitalist from Seattle, whose speech at the TED University conference was deemed “too politically controversial to post on their web site” gave a speech about inequality. The speech is below and the slide show presentation can be found HERE.

If you are wise, you will read the speech below and then view the slide presentation at the above link.

Who creates jobs in America? Read the speech below.

It is astounding how significantly one idea can shape a society and its policies. Consider this one.

If taxes on the rich go up, job creation will go down.  

This idea is an article of faith for Republicans and seldom challenged by Democrats and has shaped much of today’s economic landscape.

But sometimes the ideas that we know to be true are dead wrong. For thousands of years people were sure that earth was at the center of the universe. It’s not, and an astronomer who still believed that it was, would do some lousy astronomy.  

In the same way, a policy maker who believed that the rich and businesses are “job creators” and therefore should not be taxed, would make equally bad policy.  

I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.

That’s why 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 a “circle of life” like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary middle-class consumer is far more of a job creator than a capitalist like me.

So when businesspeople take credit for creating jobs, it’s a little like squirrels taking credit for creating evolution. In fact, it’s the other way around.

Anyone who’s ever run a business knows that hiring more people is a capitalist’s course of last resort, something we do only when increasing customer demand requires it. In this sense, calling ourselves job creators isn’t just inaccurate, it’s disingenuous.

That’s why our current policies are so upside down. When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.

Since 1980, the share of income for the richest Americans has more than tripled while effective tax rates have declined by close to 50%.  

If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. And yet unemployment and under-employment is at record highs.

Another reason this idea is so wrong-headed is that there can never be enough super-rich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the median American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, we go out to eat with friends and family only occasionally.

I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or cars or enjoy any meals out. Or to make up for the decreasing consumption of the vast majority of American families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

Here’s an incredible fact. If the typical American family still got today the same share of income they earned in 1980, they would earn about 25% more and have an astounding $13,000 more a year. Where would the economy be if that were the case?

Significant privileges have come to capitalists like me for being perceived as “job creators” at the center of the economic universe, and the language and metaphors we use to defend the fairness of the current social and economic arrangements is telling. For instance, it is a small step from “job creator” to “The Creator”. We did not accidentally choose this language. It is only honest to admit that calling oneself a “job creator” is both an assertion about how economics works and the a claim on status and privileges.

The extraordinary differential between a 15% tax rate on capital gains, dividends, and carried interest for capitalists, and the 35% top marginal rate on work for ordinary Americans is a privilege that is hard to justify without just a touch of deification.

We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Rather they are a consequence of an eco-systemic feedback loop animated by middle-class consumers, and when they thrive, businesses grow and hire, and owners profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.

So here’s an idea worth spreading.  

In a capitalist economy, the true job creators are consumers, the middle class. And taxing the rich to make investments that grow the middle class, is the single smartest thing we can do for the middle class, the poor and the rich.

Thank you

The faintest of praise is fodder for campaigns

Those political advertisements about Governor Walker and job creation are compelling, aren’t they? One side triumphantly says ‘Governor Walker created 30,000 jobs since he took office’ (woohoo!) while  the other side says disparagingly ‘Under Governor Walker, Wisconsin placed last in job creation’ (OMG, the sky is falling!) And, as we suspect, both marketing ads are likely true but immaterial.

Did you know that Wisconsin possesses a total of ~2.8 million jobs? Those 30,000 jobs represent an increase of ~1% of the total jobs in Wisconsin.  Do I still hear a ‘woohoo’?

All of this only matters if you think that the Governor can create jobs or lose jobs in our state. We are all adults and we know that a rising tide floats all boats while an ebbing tide lowers them – whether or not a Republican or a Democrat is in charge. However, if the tide is rising and the jobs boat is sinking, the Governor should do something to save passengers and crew. (pay attention, ex- Governor Doyle.)

Political advertising does bear scrutiny. Touting a 30,000 jobs increase is faint praise indeed in 2.8 million jobs state. Perhaps this should be noted by the media.

Ballot Access Not Achieved

Unfortunately,  I will not make ballot access this year. This makes my challenge larger but not totally unexpected.

I sent my collected signatures to the GAB in Madison and will now wait for the final tally.

Some say that it didn’t matter if I sent them if I didn’t have enough signatures but I think that I owe the people who signed for me a bit of respect; an acknowledgement that I appreciate the time they took to listen to me and sign my forms. Officially filing those forms is a sign of respect.

It was interesting when people declined to sign. Some said “I don’t sign anything.” While others said “I can’t, I am a convicted felon”.  I enjoyed the couples that invited me into their homes and asked questions about why I am running for Congress and how I will vote. It was good to hear from them on their issues.

As you can imagine, the recall in Wisconsin was the topic at hand. Some were quite good at not divulging their position until I stated mine. Others adopted a tone like “You’re not a union supporter are you?” And still others were upset by Governor Walker’s actions and ‘wanted to throw the bum out’.

My position is clear. I oppose the annual union re-certification. Governor Walker went too far; however,  I also oppose the recall because Governor Walker’s actions were not significant enough to warrant recall.  He committed no crime and was not unethical in the process.  When June 5th rolls around,  I will vote in an independent manner.

My favorite signature rejection was by an older man who wanted to know why I was running as an independent. I began to explain how the two major parties had mismanaged government and the American Dream. I went on to explain how the federal government had passed a federal law prohibiting anyone from selling certain kinds of baby cribs in garage sales.  I said that it was not a responsibility of the federal government to make it illegal for you to sell cribs in a garage sale. I said that community standards was the best way to address this and perhaps a state could set these standards. He tersely said “Well, the states were probably not doing anything so the federal government had to step in. I like babies so I am not going to sign anything for you.” Then he turned his back and closed the door before I could reply.

And as strange as it may seem, this man is one of the reasons I want to become a congressman. I like babies, too, but federal laws are not about choosing what kinds of cribs are sold in garage sales.  Men like this need practical legislators who know what the limits of a federal government are and can create a solution to keep babies safe without making a federal law about it.

When all you have is a hammer, everything begins to look like a nail. Federal laws are hammers and baby cribs now look like nails. Something is wrong in America when this happens.

While I won’t have ballot access this year, I will work toward increasing my vote tally in November. Babies and the rightful use of federal law require I continue.

Letter to the Editor (The Chetek Alert)

Dear Editor,

The US budget cannot be balanced even if the federal government is dissolved.

In looking at President Obama’s 2013 budget, the projected outlays are $3.8T. The projected income is $2.5 T which leaves a shortfall of $1.3T. That $1.3T shortfall exceeds the total amount of dollars spent for the entire federal government. More than the Executive, Judicial, and Legislative branches combined. We are spending too much money on our government, yes, but we are also spending too much money on debt interest payments and on entitlements. We can do better. We must do better.

Who works for America? Republicans and Democrats blame each other for this mess but the fact is that both political parties have sucked the wealth out of our national treasury in different ways. Who works for America? Not those who pander to lobbyists for campaign funds. Who works for America? Not those you and I voted for. They work for themselves and the glory of their particular political party while you and I foot the bill. To the victor go the spoils, they say. Both Republicans and Democrats have been victors for decades and America now has nothing to show for it except debt and gridlock.

Have you voted Republican all your life? Have you voted Democrat all your life? How is that working for America now?

If you do what you have always done, you will get what you have always got. Don’t vote Republican or Democrat this year. That approach no longer works for America. Think differently and vote independently. If you do what you have always done, you will get what you have always got. But who wants more of the same?

 

Homage to Charley Reese….

First published March of 1995, Charley Reese wrote a similar version in 1983.  A potent article on our government.

 

THE 545 PEOPLE
RESPONSIBLE FOR ALL
OF AMERICA’S WOES

BY CHARLEY REESE

Politicians are the only people in the world who create problems and then campaign against them.

Have you ever wondered why, if both the Democrats and the Republicans are against deficits, we have deficits? Have you ever wondered why, if all the politicians are against inflation and high taxes, we have inflation and high taxes?

You and I don’t propose a federal budget. The president does. You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does.

One hundred senators, 435 congressmen, one president and nine Supreme Court justices – 545 human beings out of the 235 million – are directly, legally, morally and individually responsible for the domestic problems that plague this country.

I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered but private central bank.

I excluded all but the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it.

No matter what the lobbyist promises, it is the legislation’s responsibility to determine how he votes.

A CONFIDENCE CONSPIRACY

Don’t you see how the con game that is played on the people by the politicians? Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Tip O’Neill, who stood up and criticized Ronald Reagan for creating deficits.

The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating appropriations and taxes.

O’neill is the speaker of the House. He is the leader of the majority party. He and his fellow Democrats, not the president, can approve any budget they want. If the president vetos it, they can pass it over his veto.

REPLACE SCOUNDRELS

It seems inconceivable to me that a nation of 235 million cannot replace 545 people who stand convicted — by present facts – of incompetence and irresponsibility.

I can’t think of a single domestic problem, from an unfair tax code to defense overruns, that is not traceable directly to those 545 people.

When you fully grasp the plain truth that 545 people exercise power of the federal government, then it must follow that what exists is what they want to exist.

If the tax code is unfair, it’s because they want it unfair. If the budget is in the red, it’s because they want it in the red. If the Marines are in Lebanon, it’s because they want them in Lebanon.

There are no insoluble government problems. Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take it.

Above all, do not let them con you into the belief that there exist disembodied mystical forces like “the economy,” “inflation” or “politics” that prevent them from doing what they take an oath to do.

Those 545 people and they alone are responsible. They and they alone have the power. They and they alone should be held accountable by the people who are their bosses – provided they have the gumption to manage their own employees.

This article was taken from the Orlando Sentinel Star newspaper

Federal Overreaching…Again

Did you know that the Department of  Justice can issue rules ( aka ‘laws’) about wheelchair lifts for pools?

In September 2010, the DOJ issued guidelines for “recreational facilities,” including a new rule that all public access swimming pools must provide a lift capable of moving disabled patrons from their wheelchairs into the water.

Compliance with the rule requires pool owners to have a lift for each “water element” in their facility. So if your local community pool also has a spa, both the spa and the pool must be “accessible.” But if you have two spas, don’t worry, only one lift is required.

But then industry leaders began hearing rumors last year that Obama’s DOJ would require permanently fixed lifts for each pool and spa. They began to write letters to DOJ asking for clarification on the issue.

On Jan. 31 of this year, DOJ granted the industry’s call for a clarification: But it was not the answer they wanted. All 300,000 public pools in the United States must install a permanent fixed lift. The deadline for compliance is tomorrow, March 15. Call it “Poolmageddon.”

This is another example of federal overreach.

I support the intent of the American for Disability Act to provide equal access to buildings, restrooms, parking, and other public common areas but this is going too far. When the federal government is in the business of ensuring that disabled Americans can access every public and private swimming pool used by the public-at-large across the United States then that government is excessive and intrusive.

I don’t know if there is a way to craft a law that says equal access does not apply to all swimming pools but assuredly there must be a way to prevent the DOJ from issuing rulings like this about privately owned pools provided for guests. Equal access to community pools is reasonable. Hotel pools and spas is not.

This ‘outsourcing’ of congressional lawmaking to Executive Branch agencies troubles me. Group-think sets in and terrible laws are crafted without understanding the consequences and without congressional approval. There must be a way to rein in these egregious rules.

How do we do that?

 

 

 

US Budget cannot be balanced

http://www.youtube.com/watch?v=EW5IdwltaAc&feature=youtu.be

The video below is explains in just a few minutes why the US budget cannot be balanced. You will never have a better explanation than this one.

You should be afraid that the two parties that got us into this mess will not get us out. Then you should vote like your life depends upon it. It does.

 

 

Bye, Bye American Pie …unless we act

If you ever need proof that education does not equal wisdom look no farther than the Department of the Treasury, the Congress, and the President of the United States. Educated at the finest colleges in America, some of these people trace their government service decades into the past. Reared in privilege, surrounded by brilliant and accomplished families, and with access to all the knowledge in America, the leaders in all three areas have failed to manage the government’s household and its bank account in a responsible manner. If the National Treasury were a blind trust, those managers would be charged with crimes by the trust owners. That’s us… and we should think about that.

When it comes to big government and low taxes, David M. Walker, former comptroller general of the United States said, “That historical trend has left us with a big government that is constantly at war with a philosophy of personal responsibility and individual liberty that demands a limited government. We have created big-government programs, but we try to finance them with small-government taxes. That spells deficits and debt, and if we don’t reconcile these conflicting views of government, it will spell insolvency for the government and a worse life for many Americans. We have to balance our ideas about what government can do with our recognition of what it should do and what we are willing to pay for.”

America borrows about 40 cents of every dollar that it spends. The American government has a spending problem. There are two kinds of spending: Mandatory and Discretionary. Within the Mandatory category, 71% of government spending is for Social Security, Medicare, and Medicaid. Each was established for the noble purpose of reducing the misery of people. Within the Discretionary category, the Defense Department accounts for 51% of the spending. It makes the world a safer place to live for us, our allies, and even our enemies by ensuring the safety of the global trading routes. Another 46% of the Discretionary spending goes for domestic programs like infrastructure.

The American Pie is only so big and it is not big enough for all the Mandatory and Discretionary spending our leaders want. Is our solution to make a bigger pie (raise taxes) or to change the size of each piece (i.e., cut Discretionary and increase Mandatory spending) or to simply make smaller pies with the crust and filling that we already have (cut spending)? These are choices that we voters face. The worst of all possibilities, David M. Walker tells us, is ‘big-government programs and small-government taxes’.

Reasonable citizens everywhere can see that we must begin making smaller pies immediately, change the size of the pieces to ensure our priorities are balanced, and then consider how we will find more crust and filling to make a bigger American Pie in the future. Yet the two political parties will never agree on anything.

If America is to have a pie at all in the future, think differently and vote independently this year. The two parties that got us into this mess will not be the ones to get us out.

If big government and low taxes are at war with personal responsibility and individual liberty then I say we should begin a return to individual freedom, personal responsibility, and personal choice. Let our efforts be about right-sizing America and not capsizing it.

Dale Lehner

President Obama’s JOBS Act

Oh, dear. Every time Congress “modernize’s” a law you and I  get taken to the cleaners. ( Remember the Financial Modernization Act of 1999 that created the recession? How about the Commodity Futures Modernization Act that created unregulated derivatives? How about the Food Safety Modernization Act which seeks to prevent contamination and now includes pet food under its control?)

You know we are in deep trouble when both political parties get together and pass a JOBS Act. This is after 2 years of a Republican Party thwarting every Democrat-sponsored legislation brought forward and when Senate Democrats continuously fail to pass a budget in the past two years. But now they both agree.

I know, I know. You thought those Republicans were telling you the truth when they said “Government doesn’t create jobs, the private sector creates jobs”. Then those pesky Republicans got together with those pesky Democrats and they decided to “modernize” the way that companies raise capital via the stock market and they call it a JOBS Act. Funny. Reducing safeguards results in more jobs?

You and I are in deep trouble. Matt Taibbi writes about it here.

The “Jumpstart Our Business Startups Act” (in addition to everything else, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.

In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.

Ostensibly, the law makes it easier for startup companies (particularly tech companies, whose lobbyists were a driving force behind its passage) to attract capital by, among other things, exempting them from independent accounting requirements for up to five years after they first begin selling shares in the stock market.

The law also rolls back rules designed to prevent bank analysts from talking up a stock just to win business, a practice that was so pervasive in the tech-boom years as to be almost industry standard.

Even worse, the JOBS Act, incredibly, will allow executives to give “pre-prospectus” presentations to investors using PowerPoint and other tools in which they will not be held liable for misrepresentations. These firms will still be obligated to submit prospectuses before their IPOs, and they’ll still be held liable for what’s in those. But it’ll be up to the investor to check and make sure that the prospectus matches the “pre-presentation.”

The JOBS Act also loosens a whole range of other reporting requirements, and expands stock investment beyond “accredited investors,” giving official sanction to the internet-based fundraising activity known as “crowdfunding.”

But the big one, to me, is the bit about exempting firms from real independent tests of internal controls for five years.

There we have it.  Democrats and Republicans working together to invite fraud in Initial Public Offerings (IPOs) by “modernizing” the laws that gave us a level playing field. Caveat Emptor ( Let the buyer beware) when it comes to believing anything about new IPOs. Seems to me that those blue-collar workers with 401Ks invested in the stock market are not going to know that the financial services managers in financial growth markets are buying stock in companies whose value may be illusory. Only company insiders are going to know the truth in the future.

The article has more to say about this new law. Modernization. Yup, that’s what they call it.

And what is wrong with the staid tradition in capitalism? Can’t some people make enough money ‘the old fashioned way’ anymore?

Vote for me and I’ll work to retain traditions that have brought America and its people success.  Like the Bill of Rights. Like the Constitution. Like honorable and traditional capitalism.