Who Really Creates Jobs?

"When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around."

"It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do."

"That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer."

"And that’s what has been happening in the U.S. for the last 30 years."

-- Nick Hanauer
(H/T: To Try a New Sword on a Chance Wayfarer)


  1. Well said, Nick. I was an economics know-nothing in '07. Since then, I've been reading and studying and paying attention for all I'm still worth. I'm entirely convinced, partisanship aside, that conservatives have got the economics of recovery all wrong--dangerously wrong.

    If the wealthy "job creators" want to ignore American consumers and take both their home offices and their products overseas to be consumed where they are now made, I sometimes dare to think, "Let them."

  2. It interests me that you and I started to read economics about the same time, Nance. I had a mild interest in it before '07, but I wasn't doing much to pursue it.

    Amazing how relevant economics is, isn't it?

  3. I agree with Nick's general sentiment, but I kept feeling that it wasn't the whole story. Perhaps it was because of this statement:

    "But it’s equally true that without consumers, you can’t have entrepreneurs and investors."

    I think that there are different classes of job creators. There are "stasis" businesses; established companies with a mostly stable workforce which simply add or subtract from the workforce according to demand. These are the mainstay of the economy; the blue chips. I think this is where Nick's comments are most appropriately targeted.

    Then there are the true entrepreneurs. They are the risk takers. They can and do exist without consumers (although the businesses they spawn will not last long in such a condition). Ideally, however, they try to tap into an unrealized or locally undeveloped market. I think that these are the more vital job creators in trying to jump-start the economy, and are not effectively incentivized by simply lowering the taxes on the wealthy. Putting more money in middle-class hands may help entrepreneurs build a consumer base, but it may not be enough. I think we need strong business incubator resources and incentives to encourage the risk taking and drive the actual creation of jobs.

    At least, that's my take having not really studied economics beyond high school and news. Feel free to school me if I've made a mistake.

  4. You raise some good points, WF. I think if we were to take a sane look at the economics of job creation, we would need to concede that it's something of a cooperative effort.

    To take an example: An acquaintance of mine is in the process of buying a company. Her plans are to buy the company for about 3 or 4 million dollars after which she hopes to increase its production by laying on a second shift (read: Hire a bunch of new workers) and recapture the initial investment, then make a profit.

    Now, in order for all that to happen, several people -- or groups of people -- are crucial. First, she herself is crucial. That is, nothing is going to happen without her, the entrepreneur, putting the deal together.

    Second, nothing is going to happen without her investors putting up the 3 or 4 million needed to acquire the company.

    Third, nothing is going to happen if she cannot find the labor she needs to work the company.

    And last, nothing is going to happen if no one buys her products.

    If you removed any one of those elements from the equation, you would most likely end up without any jobs being created.

    As for business incubators, I think that in general they are like adding gasoline to the fire. When they work, they accelerate growth. But they don't start the fire all by themselves.

    What I think Nick was attempting to do by emphasizing the role of consumers is redress an imbalance in the popular discussions of job creation. Apparently, there is a tendency today to ascribe all job creation solely to entrepreneurs. Nick, who is himself a very successful entrepreneur, appears to be trying to correct that mistake by pointing out that consumers are crucial to the process.


Comments Welcome -- but no flaming. If you wish, you can email me at paul_sunstone@q.com