Thursday, May 17, 2012

Nick Hanauer Speech at TED University (Video & Text)

*** Editor's Note: Yesterday, the National Journal's Jim Tankersley had introduced the multi-millionaire Nick Hanauer, a venture capitalist from Seattle, to the audience. But as one of the first non-family investors in Amazon.com, Hanauer's speech at the TED University conference was at first deemed too politically controversial to post on their web site. Below is the video of his 5? minute speech and the full text. An important message for those who think the rich are America's job creators:

"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 indeed shaped much of the economic landscape. But sometimes the ideas that we are certain are true, are dead wrong.

Consider that, for thousands of years humans believed that the earth was the center of the universe. It's not, and an astronomer who still believed that it was, would do some pretty terrible astronomy.

Likewise, a policy maker who believes that the rich are "job creators", and therefore should not be taxed, would be equally terrible policy.

I have started, or helped start, dozens of companies -- and initially hired lots of people. But if there was no one around who could afford to buy what we had to sell, all those companies 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. Jobs are a consequence of 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 consumer is more of a job creator than a capitalist like me.

That's why when business people take credit for creating jobs, it's a little bit like squirrels taking credit for creating evolution. It's actually the other way around.

Anyone who's ever run a business knows that hiring more people is a course of last resort for capitalists. It's what we do if, and only if, rising customer demand requires it. And in this sense, calling yourselves job creators isn't just inaccurate, it's disingenuous.

That's why our existing policies are so upside down. When the biggest tax 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 top 1% of Americans has more than tripled, while our effective tax rates have gone down by 50%. If it was true that lower taxes for the rich and more wealth for the wealthy led to job creation, today we would be drowning in jobs. And yet, unemployment and under-employment is at record highs.

Another reason that this idea is so wrong-headed is that, there can never be enough super-rich people to power a great economy. Somebody like me makes hundreds or thousands as times much as the median American, but I don't buy hundreds or thousands of times as much stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and shirts a year like most American men. Occasionally we go out to eat with friends.

I can't buy enough of anything to make up for the fact that millions of unemployed and under-employed Americans can't buy any new cars, any clothes, or enjoy any meals out. Nor can I make up for the falling consumption of the vast majority of middle-class 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 retained the same share of income that they did in 1970, they'd earn like $45,000 more a year. Imagine what our economy would be like if that were the case.

Significant privileges have come to people like me, capitalists, for being perceived as "job creators" at the center of the economic universe; and the language and metaphors we use to defend the current economic and social arrangements is telling. It's a small jump from "job creator" to "The Creator". This language obviously wasn't chosen by accident. And it's only honest to admit that when somebody like me calls themselves a "job creator", we're not just describing how the economy works, but more particularly, we're making a claim on status and privileges that we deserve.

Speaking of special privileges, the extraordinary differential between the 15% tax rate that capitalists pay on carried interest, dividends and capital gains -- and the 35% top marginal rate on work that ordinary Americans pay -- it's kind of hard to justify without a touch of deification

We've had it backwards for the last 30 years. Rich people like me don't create jobs, jobs are a consequence of an eco-systemic feedback loop between customers an businesses. And when the middle-class thrives, businesses grow and hire -- and owners profit.

That's why taxing the rich to pay for investments that benefit all, is such a fantastic deal for the middle-class and the rich.

So ladies and gentleman, here's an idea worth spreading...

In a capitalist economy, the true job creators are middle-class consumers. And taxing the rich to make investments will make the middle-class grow and thrive. It's the single shrewdest thing we can do for the middle-class, for the poor, and for the rich.

Thanks you.

*** Editor's Note: This speech was originally posted at The Atlantic, but was wrongly transcribed. I downloaded the video, played it back, and re-wrote his speech verbatim. There's a related article at the Huffington Post.

3 comments:

  1. Watched Nick Hanauer on Fox talking to Neil Cavuto. Cavuto talked over him, interrupted him and wouldn't let this man get his point across. Cavuto is an absolute disgrace as an interviewer, he will only let views be heard that he agrees with. Typical Fox News interview.

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  2. The tax rate on the wealthy is not what has decimated the middle class in this country. It has been the rise of maufacturing in developing countries and our inability to compete with foreign wages. This has led to the demise of manufacturing and the higer paying middle class jobs in the US. Mr Hanauer doesn't mention what "investment" will be made with the additional tax dollars that would be taken from the wealthy and how that would help the middle class rise. There is not much substance in his talk, just more of the 'tax the rich' demogoguery.

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  3. It is NOT 'tax the rich' demagoguery, it's just a plain fact that the wealthy pay less as a percentage of their income than someone earning $50,000 a year.

    The cap on Social Security taxes, the exemption on Medicare taxes for "investment income", and the tax rate on capital gains and dividends are just a FEW examples. Mitt Romney claims a $17,000 tax deduction for a prize horse and has $100 million in an IRA account...explain that please.

    Most of the billionaires on the Forbes Fortune 400 List earn 100% of their income from capital gains, dividends, and SWAG investments. They don't pay themselves an hourly wage and deduct payrolls taxes.

    And they pay CASH for multiple homes, cars, and travel --- they don't pay interest for home mortgages, auto loans, and credit cards.

    Taxing the rich "their fair share" is not the END ALL solution, but it can help pay for such things as food stamps for working-poor families who had their good-paying manufacturing jobs shipped to China and who were then forced to take part-time low-paying jobs without healthcare and pension plans at places like Wal-Mart, Papa Johns, Staples, and McDonalds.

    Stop watching Fox News and listening to people like Stephen Moore...they spew demagoguery.

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