I read an article a couple months ago that confirmed what already made sense to me about economics. The whole concept of ‘trickle down economics‘ is one that I have had a hard time with for a while. It didn’t seem to add up and it didn’t seem to be working in America or around the world lately. I came across this article:
“Family net worth plummets nearly 40%“
It was not in some small time magazine, it was from the Money portion of CNN’s website. Now the part that I found particularly interesting was that not everyone in America was losing their ‘net worth’ at the same rate. In fact, take a look at this small portion of the article:
Families in the top 10% of income actually saw their net worth increase over the period, rising from a median of $1.17 million in 2007 to $1.19 million in 2010.
Meanwhile, middle-class families who ranked in the 40th to 60th percentile of income earners reported that their median net worth fell from $92,300 to $65,900 over the same time period.
The net worth of the top 10% did not skyrocket while everyone else plummeted…but it did go up while the rest of the country was in a decline.
I planned on writing about this when I read that article, but I wanted to do some more research before I wrote anything. I have a lot of friends who are on both ends of this spectrum. I know people who have succeeded in business that are 100% behind the concept of trickle down economics. I also know people who have no money at all and have just assumed that the people they elected were right when they said the rich create jobs and should have lower taxes so they can create more jobs. I have friends who fit in different economic sections and don’t agree with trickle down economics.
Those of you who don’t agree with my conclusions, feel free to let me know why you don’t agree. Just remember to be civil and talk to me about facts. Do not just state what you think is right or wrong, tell me why you think that and how you came to that conclusion.
I’m not un-American for suggesting that trickle down economics is a lie and that making laws and regulations based on a flawed model will/have hurt this country. Don’t accuse me of being a socialist or a communist or anything like that. Just look at the facts and lets talk about it.
Recently a man named Nick Hanauer spoke to TED (Technology, Entertainment and Design) conference. For those of you who don’t know Nick by name, he is a multi-millionaire venture capitalist from Seattle. The video of his talk is less than 6 minutes long and it is right here:
If you don’t have 6 minutes to spare I will give you the gest of what Nick is saying in his talk. He states that the rich don’t create jobs. Jobs are actually the last thing that a rich business owner wants to make. Jobs are created because of the demand from the middle class consumers. He says that our politicians and our policies have been based on faulty information and a false premise. Only consumers can set in motion a cycle of increased demand and hiring. “In this sense an ordinary consumer is more of a job creator than a capitalist…” He says a lot more and I don’t consider myself to be an expert, but he seems like someone that you (the reader) may take a bit more seriously when it comes to the way business works.
There was another video that I watched. This is the one that might ruffle even more feathers than the last one, and I’m pretty sure that most of you will not take the 80 minutes to watch this video. It was a video called ‘The One Percent.” It was created by a 27-year-old man who is the heir to the Johnson & Johnson pharmaceutical fortune. Here is the link:
In this video he is mainly focused on the growing “wealth gap” in America. The thing about both of these videos was that they were both made by people on the other side of the 1% from me. I’m not in the wealthy group, I grew up in the middle class. My parents owned their own home when I was born and my Dad made enough money so that my Mom was able to stay at home until I was in Jr. High. We weren’t rich, but we had enough to eat (even if a lot of it was grown in our garden) and we didn’t get upset when others had more than us. I’m not jealous of anyone who has made lots of money. I’m not saying that rich people are all terrible and we should take all their money and give it to people who don’t work.
I’m saying that right now in America we are trying to create jobs the wrong way. We are giving breaks and writing legislature to make it possible for venture capitalists and the rich to keep more of their money so they can create jobs. The problem is that they are not creating more jobs. Here are two more small bits of the transcript from Nick Hanauer:
[O]ur current policies are … 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.
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.
Now is the part where you get to tell me what you think. I’m not saying I’m the one with all the answers or that I am a business genius…I’m just asking you to take a look. If you don’t agree, then we are still in the same place we were before. At least you know where people are coming from when they say they don’t agree with your views on trickle down economics.