*This article is inspired in this talk https://www.youtube.com/watch?v=CKCvf8E7V1g
In this crisis, Governments has decided to cut spending and to follow IMF’s rules (and Germany ones) and trust austerity. But Governments decided more things. One of them, is to not tax rich people. Today, I saw a video from Venture Capitalist Nick Hanauer who said that people believe that if taxes on the rich go up, job creation will go down. In fact, this is a nice topic to talk about. First, we consider that rich people are those who have a lot of money, but how much? Lets consider that rich people are the ones who appear in the Forbes’ list (Wikipedia says…). So, how important are the rich in the economy? First, we should say that I distinguish between two kinds of rich. First, we’ve those who’ve earned their wealthy with hard work; they had an idea and now they are experiencing the benefits of it. If we check the economic theory we learn that the entrepeuner risks his money in order to obtain a benefit in the long-term while the employee is the one who makes the product, sells it or even distribute it. This economic paragraph is on the books and everyone can look at it. (The Wealthy of Nations, Adam Smith is a good way to understand how the economy works today and what s capitalism about.) But we need to analyze that. Are rich people to important for the economy? Are they so essential for the foreign trade? Are they the cause of the benefit of middle-class-people? Do they really create jobs?
The entrepeuner has always been seen as if we were a “bad-person”. And, why? In 1760, the Industrial Revolution appeared. With it, many many companies started to hire people from the countryside. The working conditions of the workers were so bad that many of them died while they were working. People started to think that it was a problem of the entrepeuners. And so it was. They tried to earn as much money as possible even if that gain meant certain death for workers. They did not care at all. History is full of situations like this one. And people, believe them. They were true, of course. But as times passes, entrepeuners do too. And they are never the one they were. They still want to gain as much money as possible, but they do not trie to “kill their employers“.
Rich people do not create jobs. Because they needn’t. Do a especulator create jobs? Absolutely not. They destroy them. (That’s why many economists ask for the Tobin Tax, a Tax that would tax especulators) But, do rich people with companies create jobs? They do sometimes. As they are big companies, they depend of external agents and of internal ones. Zara hires a saleswoman just if they know they are going to receive some benefit. If not, of course they won’t. But that’s not bad: that’s capitalism. They create jobs, but middle class do too. They create more companies than richer people, because they risk when they create a company, and the big-entrepeuner just when he created his company. So middle-class is essential for the economic prosperity. That’s on the books too. But I have always wondered why (considering that almost everything is on the books) we do not check books often. Could our economic activy improve? Sure it could. But sometimes, we do not want it to happen. That’s on the books too.