Lee Lorenz has, as usual, got it right in his cartoon in the November issue of WestView. The cartoon shows what used to be called a “plutocrat” in a chauffeur-driven car, smoking a cigar, and grinning broadly. The bumper sticker on the rear of the car reads JOB CREATOR ON BOARD.
In recent years, it has been widely agreed, even by those who should know better, that if the rich pay fewer taxes, they will be able to use the money to enlarge their businesses, necessarily hiring more workers in the process. It would be nice if this was true, but it isn’t. For one thing, the rich do a lot of things with their money besides creating jobs: they invest in real estate, often in foreign places; buy art, which may create a job for the artist if she happens to be alive, but is no use to Van Gogh or Gaugin; take their families on expensive trips to London or the south of France, which may create jobs in London or Nice, but few in Detroit and St. Louis; adorn their wives with diamonds and pearls, which is also not much help for American workers, few of whom are diamond miners or pearl divers; and so forth.
However, even if we are to assume that the money the wealthy keep through lower taxes is being plowed back into their businesses, it does not invariably follow that it creates jobs. The first function of business managers is to create profits; if they consistently fail to do this they will shortly be out on the sidewalk trying to create jobs for themselves. One of the most important ways such a manager can increase profits is to reduce “labor costs,” that is, lower wages and reduce the number of employees he or she has. Clearly, one of the primary functions of a business person is not merely to avoid creating jobs, but to destroy as many as possible by introducing automation, more efficient work systems, and shipping as many jobs as possible to foreign places where laborers living in huts and subsisting on rice and cabbage can be paid off in goats and farthings.
This is not sheer speculation. The business people involved have said so themselves. In a recent article on a related subject The New York Times quoted one businesswoman as saying, “You go back to what your fiduciary responsibility is to your stockholders.” A similarly situated executive said, “Our obligation to the communities where we do business is to run a successful business.” The Times piece summarized the viewpoint of “private consultants and local officials” as believing that they “increasingly view the creation of jobs as an expense that should be subsidized by the tax-payers.”
That was certainly the position of A.I.G, which continued to enjoy a $23.8 million tax abatement from New York City, while being bailed out by the U.S. government to the tune of $180 billion. Again, according to The Times, “Officials at dozens of other large corporations said they owed it to shareholders to maximize profits.” Yet in another story, The Times cited the case of General Motors. “For years, mayors and governors anxious about local jobs had agreed to G.M.’s demands for cash awards, free buildings, worker training, and lucrative tax breaks.” Yet when G.M. found itself in financial trouble, it closed a slew of factories in many of the communities which had poured money into G.M.’s coffers to keep those factories running. In all, The Times concluded, “at least 50 properties on the 2009 liquidation list were in towns that had awarded incentives, adding up to billions in tax-payer dollars….” It is abundantly clear that managers of businesses believe that their first obligation is to the shareholders, who for the most part are not living in fourth-floor walk-ups and collecting food stamps; it is not to their customers, their suppliers, or the communities which harbor them.
All of this should be obvious and it probably is to a lot of people, including many of the managers who are benefiting from the system. What should be done about it is equally obvious: the government should raise taxes on those who can best afford to pay them and use the money to create jobs. There is plenty that needs doing in this country.
Clearly, there needs to be more money spent on preparing for the benefactions of nature, such as Sandy. It is widely accepted that we ought to be putting more money into schools – paying teachers more to attract the best possible candidates, updating science equipment, increasing library budgets – you name it. Dealing with illegal immigration, no matter how it is done, will cost billions. There is no shortage of problems that will take money to solve.
The private sector is not going to throw money into our schools and libraries; it counts on government to produce educated workers. Furthermore, its only interest in immigration is to see that there is a steady inflow of cheap labor. Much of what needs to be done in the United States must be done by government – for what reason, after all, do we have government? The primary job creators in this country are governments – city, county, state, Federal. They, not the putative job creators in business, must be given the money to do what is necessary. What we must do, then, is not reduce taxes for the rich, but increase them; and the sooner we wake up to this fact, the better.
