"In a properly functioning capitalist economy, rich people don't 'create jobs' for workers; workers, upon having jobs, create rich people."
This is a fantastic read from Baltimore City Paper, on the "fact" that Maryland's number of millionaires dropped to 4,910 in 2008 from 7,067 in 2007. It includes a basic primer on how business works, which is so delightful we must excerpt it here.
Critics of the millionaire tax say they've never heard of a poor man hiring a worker. Only the rich do that; therefore, to render the wealthy less so by taxation is to destroy jobs.
The theory presumes that the wealthy hire people out of charity. In this model, jobs are bestowed upon lucky workers by the industrious entrepreneur, who derives his own wealth from some magical practices (having nothing to do with the workers he may hire) which are anyway unfathomable to outsiders.
To hear self-proclaimed capitalists make this argument is irritating, because it suggests they don't understand how our economic system is supposed to work. They have the process exactly backwards.
In a capitalist system, investors make money not despite hiring workers, but because they hire workers who, if they are adequately managed, create value in excess of the wages and benefits they are paid. This value is called "profit," and the business' owner gets to keep that, after paying taxes.
In a properly functioning capitalist economy, rich people don't "create jobs" for workers; workers, upon having jobs, create rich people.That's how the system works, in theory.
But the reality is different from the theory. In today's marketplace, the super-rich have become richer in large part by destroying jobs.
Me, I rob banks.
That's brilliant. I will now go back to my crying nap.
The very rich are different than you and me. They think they're important.
"… different from…" You brute.
Me, I'm just waiting for the government to create a job for me as a death panelist.
I imagine the position to be a mix of "Soylent Green" and Bob Barker
I was like more picturing myself in a high school gym with a faded banner above me reading "America's Got Nosocomial Infections" I guess
You'd think millionaires could afford better weaves.
I'm not looking for a job from a millionaire as much as I am a sinecure.
Do rich people make jobs or do jobs make rich people? I'll think about that after I wonder what is better then eternal bliss. Nothing you say? But a slice of pizza is better then nothing. So a slice of pizza is better then eternal bliss? I'm confused.
"In this model, jobs are bestowed upon lucky subjects by the king, who derives his own wealth from magical practices which are unfathomable to barbarians."
Feudalism: It's what's for dinner!
Useful information! Now I can become a rich people. I'll just hire some workers. Also, I'll see to it that they're "adequately managed," because that's how you get created and begin to exist as a rich people. Also, since I'm going to be so grateful about being a rich people (with all the clothes and food I want! finally!), I will be content to remain rich and not try to be super-rich, by destroying jobs.
Of course it's a little puzzling that I somehow will be able to destroy jobs by being an evil rich people, but unable to create them by being a nice rich people. But never mind that! What, me worry? I'm going to be rich!
As evil rich person in training, I like destroying jobs. It's little like playing whack a mole, with cubicle worker drones playing the role of moles.
Also I'm boning up on my euphemisms like "Debt restructuring" or "focusing on core synergies" or "we're firing you all and outsourcing production to Shenzen"
Be careful about the Shenzhen thing. You might wind up creating more lower-paying jobs than the number of higher-paying jobs you destroy. You would still get richer, but the point was to destroy jobs.
The important thing is to keep wages just above subsistence; this prevents the workers from revolting. Marx explained it in On Cranberry Sauce and Cigarettes, The Struggle for Indifferentism
Also make sure there isn't some kind of a government program giving out FREE cranberry sauce. If there is, why would anyone work? They would just wallow in their corpulence, idle hands sticky with cranberry goodness and god knows what else. And then I won't be rich!
That might not be such a bad program, because it would keep the unemployed happy all the time and yet who would be disincentivized by government cranberry sauce?
The thought of a meal consisting of government cranberry sauce and government cheese just made my stomach turn.
I think it could be nice in a smoothie.
Mmmmmmm, government cranberry sauce cheese! Perfect for a turducken on rye!
After they are done strip-mining the planet, and the environment becomes truly hostile to human life, I expect the obnoxiously rich to put domes over their estates, and rocket engines underneath, blasting their "compounds" into Low Earth Orbit. If I'm lucky and willing to play the Master's game, I could get a job trimming hedges and mowing the lawn…
in space, no one can hear you mow.
When a man tells you that he got rich through hard work, ask him "Whose?"
– Don Marquis
I challenge the primer's delightfulness
The observation that poor people don't hire many workers is just that: an observation of fact. It is not a 'theory which presumes that rich people hire out of charity'. It is fact which results from from people not being able to use money that they don't have.
An investor of course invests money in labor, materials and so on in the hope that he will make more back in the future. Unfortunately it is very difficult to find employee's and suppliers who will supply you with materials and work for you on the grounds that you might be able to pay them in 2 years or so. This is why you don't see many hobo's opening car factories and the like.
dammit. i was going to open a couple of car factories and the like.
OMG, are you one of the oligarchs running the US? 'Cause I'm a hobo with a really good idea!