Nick Hanauer: Rich People Don’t Create Jobs

A controversial TedTalk from Nick Hanauer. It is so sensitive that it is pulled from TedTalk website.

Time magazine have a piece on this talk, Was Nick Hanauer’s TED Talk on Income Inequality Too Rich for Rich People?

I do not totally agree with the point of view of Mr. Hanauer.

He raised a valid challenge on the inequality issue with lower tax rate on the rich people and that it has not resulted in improvement in job creation. His understanding that the middle class people is the actual fuel in driving the economy is also plausible.

Two things he mentioned on corporations are definitely true. First, corporations always try their best to minimize the need of expensive labour resources. Second, when labour resources cannot be avoided, corporations tend to seek for the place with the lowest total labour cost to hire workers.

Mr. Hanauer’s point of view is biased because of his experience in profitable companies does not represent the nature of all businesses. It is also not possible to have middle class families to spend more money as a group when middle class the concept itself is disappearing in every part of the world.

Taxing more on the rich people will not necessarily transfer those money into creating more middle class people. It may as well be transferred into the hands of another group of rich people who work closely with the governments. No offense intended, but just increasing tax on the rich is not a solution.

I see the real issue is not just a matter of rich being taxed unfairly, it is the treatment of capital in such naive way by the governments that highlights how out-dated the politicians are. Throughout history, it is those economies with middle class families coming from owners of small to medium size companies that have the better overall growth and stability. Yet, these small to medium size business owners are the ones hated most by both right-wing and left-wing political parties. The right-wing politicians are in bed with big corporations to crush the small businesses while the left-wing politicians mistaken the small business owners as capitalist pigs in the same class as the large corporation evil-doers.

By allowing big corporations to exist in part of the economy that is best serviced by small to medium size businesses, the governments around the world routinely destroy the small to medium size businesses that are the essential engines of their economies. The original middle class population has now mostly disappeared.

The replacement middle class coming from the big corporations do not have the same characteristics like the original. The new middle class mainly coming from big corporations do not have independent survivability as their existence is a function of the big corporations.

There is no real solution to resolve this problem.

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