The Real Creator of Jobs

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IN RESPONDING TO NICK HANAUEER’S observation that “the pitchforks are coming,” one of the .01% noted that the democracy has successfully “tamed” the masses, to the point where violent responses to growing economic inequality are no longer likely.

One wonders what that person must think of the millions marching in the streets of Paris in response to a brutal attack on Charlie Hebdo, or the hundreds of thousands marching in streets across the world seeking change in the world’s financial system. These demonstrators might not carry rudimentary weapons like pitchforks, it’s true, but on the other hand, armed with smartphones, websites, petitions, cameras, and powerful texting abilities has meant that they can actually enter into the consciousness of the world in ways never seen before.

Hanauer understands the distinction, saying forcefully that modern revolutions come gradually, then suddenly. He believes his financial peers just don’t get it, despite all their supposed acquired intelligence.

But his greatest frustration is reserved for just how unnecessary it all will be.

“If we, the elites, do something about it, if we adjust our policies in the way, say, Franklin D. Roosevelt did during the Great Depression – so that we help the 99% and preempt the revolutionaries and cries – that will be the best thing possible for us rich folks, too. It’s not that we’ll escape with our lives; it’s that we’ll most certainly get even richer … My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.”

It was when he realized this that Hanauer decided he wanted to try changing the conversation. He calls it “middle-out economics,” and it’s compelling stuff. It simply asserts that if workers have better jobs and more money, businesses have more customers.

In this he hits on a great truth that has been overlooked. The financial elite is fond of saying that governments don’t create jobs. Well, if recent years are any indication, neither do corporations. It is, in fact, middle-class consumers, not rich businesspeople, that are the true job creators. When businesses have more customers, they require more workers to fill the demand. It is a thriving middle-class that created the rich, not the other way around. Endanger that middle-class and it’s inevitable that fabulous wealth will prove fleeting.

Hanauer is compellingly effective when exposing the underlying fallacies of elite assumptions. For those calling for smaller government, it will never happen, he claims, if so many people keep falling through the cracks. “You have to reduce the demand for government and that hasn’t happened under conservative Republican leadership – in each case, the size of government and debt has mushroomed under their watch.” He isn’t trying to be partisan, he maintains, but it should be obvious to all sides of the political spectrum that the more people out of work or facing financial insecurity, the greater will be the call and need for government intervention and support. It’s inevitable.

Governments are in the crosshairs of the 1% not because they are big or small, but because they can legislate regulatory control and nothing scares the wealthy class more. And so the assault on government continues. Yet despite this reality, Hanauer believes that both the right and left sides of the great political divide are slowly finding common ground on the need for a common approach to save capitalism from itself. “Perhaps that’s one reason the right is beginning, inexorably, to wake up to this reality as well,” he says. If he’s right, then unbridled capitalism doesn’t have much time left. In the next post we’ll examine if politics can actually begin to formulate a plan to pull it all back from the brink.