Republican Myth #2 The Myth of “Job Creators”

Just because you say something over and over again, does not make it true.  Political pundits have been “spinning” common terms to suit their political bias for many years.  In the Bush (43)/Karl Rove era, the practice reached new heights.  Reluctantly, I have to admit that the Republicans have been very effective over the past decade.  Again “reluctantly” I must admit to a certain amount of admiration for how disciplined party members have been at sticking to the prescribed “talking points” and repeating them over and over.

(One example:  Over 60% of voters that re-elected Bush in 2004 still believed that Saddam Hussein had direct ties to Al Queda and the 911 attacks, even though it had been widely disproved by then.  Certainly carefully worded and often repeated talking points contributed to this misconception.)

This election year has produced a number of new Republican created idioms in an attempt to “spin” common terms to their political advantage.  Today’s beef is the use of the term Job Creators to replace “the wealthy”.  Using the term Job Creators when unemployment rates are still high during the worst recession since the Great Depression is most likely a smart move.  The year 2012 will prove if it is also effective.  Unfortunately, it’s just misdirection!

The truly wealthy are not the true job creators in this economy.  The entrepreneurs are!  That is to say, it is the small business owners just starting to grow that create the new jobs.  Once they get wealthy, they make their money by using their money to make more.  In the past, there was a strong argument that using their money, or “investing” it, actually did create jobs.  However, over the past 15 year’s more money has been “created” on Wall Street via speculation and creative derivative products which have not produced true goods or services, and thus NOT JOBS!  In other words, “investing” can create jobs, but “gambling” does not.

Employment/Labor costs are typically the highest cost in operating a business.  The large corporations have trimmed down to very lean levels and out-sourced a lot of labor.  They are efficient, and corporate profits are at historic highs and have been for the last few years of “recovery”.  Yet, unemployment remains stubbornly high.  Think about it.  If CEO’s can produce a dividend and rising stock prices, they get bigger bonuses.  They are not interesting in “creating jobs”.  Employees cost money!

The “Bush Tax Cuts” went predominantly to the wealthy.  If you don’t believe this fact, you don’t understand the difference between INCOME and WEALTH and why the capital gains rate is so critical to this entire argument.  (Future postings will expand on this topic.)  However, if you exclude government jobs, the number of jobs in the U.S. economy remained essentially flat during the entire Bush presidency.  Where are the jobs?  How can you call the wealthy job creators?

We tried that approach in earnest with the 2001 tax cuts.  It didn’t work.  No matter how many times you say it, you can’t replace the word wealthy, with the words “Job Creators”.  It’s a myth!

 

Republican Myths #1 Supply Side Economics

I am not an economist.  I recognize that Ayn Rand and John Maynard Keynes pursued economics academically and came to substantially different theories.  I don’t know which, if any, is the most correct.

Here is what I do know.  For more than 30 years wealth in the U.S. has concentrated.  There are many ways to express wealth concentration through statistics, but no matter how you describe it, the U.S. has had a concentration of wealth for the past three decades.  This is a fact, not an opinion.  It can not be argued or spun.  It is simply the case.

What happened 30 years ago?  Ronald Reagan introduced “supply side” economics and the Republican party adopted it is as orthodoxy.  (The term “voodoo economics” is often used to demean the theory.  I love the irony that the term came to prominence when Gorge Bush ["41"] used the term to deride Reagan during the 1980 presidential campaign!)  Even before Reagan, tax rates on the wealthiest had been cut and they have continued to be lowered ever since (most recently under Bush ["43"] in 2001).  Rush and Fox don’t talk about it, but tax rates overall at currently at historic lows (even though we are supposed to be “at war”).

Supply side economics promises that a “rising tide lifts all boats”.  However, for more than 30 years now that simply has not happened (see wealth concentration in the second paragraph).  How long do the middle and lower classes have to wait before the tax cuts for the rich “trickle down”?  I was 15 in 1980.  Now I am 46, and it is getting harder and harder to deny that I am now middle aged.  Quite frankly, I am tired of waiting!

Once again, I don’t claim to know which economic theory is correct.  The issue seems to be based more on belief than on fact.  But the facts of my adult life have proven that trickle down supply side economics have simply not worked as promised in the U.S. of today (or the past 30 plus years).  Supply side economics is a MYTH!

Coming soon, other “Myths”:
-The Myth of “Job Creators”
-The Myth of “Government spending hurts the economy”
-The Myth of “We need business men to run the country”, and a few more after that!

Notes:  As noted, concentration of wealth can be expressed in many ways.  Anecdotal statistics were intentionally left out of the second paragraph above so as not to detract from the argument, because no educated informed person can deny the preponderance of fiscal evidence.  It’s a fact, wealth has been consistently concentrating in the U.S. for more that three decades (with the exception of one single year in the early 1990′s).  My two favorite “examples” are as follows.

-In the 1970′s the average CEO pay was 40 times the pay of the average worker.  Today that number is closer to 400.  (Can they work 400 more hours?  Be 400 times smarter?  Take 400 times the risk?)

-Today, wealth distribution in the U.S. is closer to that of Zimbabwe’s then to any other developed nation.  Way worse than traditionally aristocratic England.  Wow, the U.S. is more aristocratic than the country from whom the colonies declared independence.  That is tough one to swallow!