I’m still working on my inequality series, but I take a brief sojourn today to share with you some thoughts from the other side … the Rich Side. Compared to the world population, I’m among the very, very richest people alive (ever); compared to my fellow Americans, not as much!
Nick Hanauer is one of the wealthiest people in America, and almost surely one of 5000 or fewer richest people among the roughly 100 billion people ever born, ever. Rich! Starting with a degree in philosophy—“College need not be a trade school,” says me, a proud liberal arts grad—he’s worth $1,000,000,000 or more. He’s also the author of The Pitchforks are Coming … For Us Plutocrats from the July/August issue of Politico. And he’s the guy whose TED Talk was banned because of complaints from the business sector. (Read the article, for it’s better than the TED Talk.)
Now, here at Mark Rubin Writes we go for “fair and balanced.” So, here’s what Tim Worstall, a Forbes contributor, had to say about Nick Hanauer’s TED talk and his ideas. The piece is called The Ignorance of Nick Hanauer’s TED Speech. (Read it too, so you, too, can be “fair and balanced.” It’s shorter than America: Imagine the World without Her, it’s a much better piece of work, and you won’t be giving Dinesh D’Souza some share of your $7.25.)
Who’s right? I think the controversy operates on two levels. Let’s talk taxes first. Does lowering taxes create jobs? Well, sure, if marginal rates are high enough. However, just because cutting taxes from 70% marginal rates—which occurred on Ronald Reagan’s watch—may have boosted the economy and helped create jobs, we can’t expect the same effect when marginal rates are at 39.6%. In part this is true because a cut from 70% to 35% is a 50% reduction in the marginal rate, while a cut from 39.6% to, say, 28%, is a less than 30% reduction. It’s also true because business owners are not automatons, and because taxes are, at most, but one factor among many that play into a business decision. (More on this in the post script!)
So what’s the sweet spot? Who knows? What do we know? Cutting taxes, alone, does not create jobs, and when tax cuts are motivated by the likes of Grover “I want to get government down to a size where we can drown it in the bathtub” Norquist, we may want to think twice before we act. Tax-cutters like Mr. Norquist are not about the jobs; they’re about not having government telling them and theirs what to do!
And the second level? When I read material about job creators and tax cuts and how to get everything going well, I detect a sense that many people feel underappreciated. The Right Wing commentariat, along with Wingers like Mitt Romney, Donald Trump, et al., tell us we don’t appreciate the capitalist class and all it does for us. Frankly, I don’t hear this from my business clients. Only among the chatterers! I know not from where this sense of “we’re not appreciated” comes, but if it helps anyone:
I have represented employers large and small, and have helped several businesses grow substantially during my 32+ year career. (I’ve also been an employer during those years.) I appreciate the risks my clients take and the responsibilities they bear, every night and every day. Thanks, all of you all—which includes those I have represented, those I have not been able to serve, and the many more with whom I have had no contact—for what you do. I, speaking for me and mine, appreciate the fact that without your willingness to risk your capital, we’d be living in a very different place.
Now, we have lived under mostly declining marginal tax rates since 1981, and tax rates are only slightly more than half as high as the rates in place in 1981. Wages are stagnant, wealth has become unequal on a scale not seen since the late 1920s, and we’re in this place despite the fact that we have shifted over the past 40+ years from a one-earner to a two-earner family economy.
So maybe after 30+ years we should try something else, for “the definition of insanity is doing the same thing over and over and expecting a different result.” Daniel D’Addario for Salon calls the quote “the most overused cliché of all time,” and he’s probably right. Then it occurred to me: Maybe there are people who like the system we have! (More soon!)
P.S. I’m sure many most of my clients would like lower tax rates, and some among them do believe that with lower rates we’d be better off collectively. That said, I have never had a client tell me taxes, rates, etc. play any role in their planning, hiring, etc. Never. Not once. My clients hire people when they think hiring an employee will, in the mix, lead to more profits. That’s all, plain and simple!