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July 14, 2014 10:56 AM Age: 5 yrs
This Billionaire Gets It! - text/videoCategory: Larry Checco
Source: Larry Checco, featured commentator
Billionaire Nick Hanauer makes more sense in a 5-minute TED Talk video—which, BTW, was apparently temporarily banned by TED Talk execs—than any supply-side economist has in decades (see video below).
Hanauer earned his money the new-fashioned way—he worked in technology and invested wisely. He founded an Internet media company that in 2007 was acquired byMicrosoft Corp. for US$6.4 billion, and also was the first non-family investor in Amazon.com Inc.
But unlike many of his super wealthy peers, his fortune hasn’t resulted in money-clogged, sclerotic thinking.
In the TED video and in other public statements, Hanauer makes a clear case for why it’s in the best interest of everyone—millionaires and billionaires included—to invest in our once great American middle class.
“We’ve had it backward for the last 30 years,” explains Hanauer. “Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.”
Fact is Hanauer understands the symbiotic relationship that must exist between customers and businesses if both are to thrive.
He talks about the “customer-corporation ecosystem,” “feedback loops,” “demand-side verses supply-side economics,” “abundance of customers verses abundance of profits,” the “need to invest in the middle class,” and more.
I’d prefer to refer to it as simply enlightened capitalism.
Nobody Wins This Game
The sad fact is that those at the very top of the wealth pyramid are not competing against the rest of us. They’re competing against each other.
A wealthy individual told me years ago that it’s all just a game, that money is simply the means to keeping score.
“Show me someone who is worth $500,000,000 and I’ll show you a frustrated billionaire,” this particular individual told me.
Hanauer takes that thought one step further.
"Ultimately, this is not about money,” says Hanauer, “it's about status, privileges and power. For a subset of these people (the super wealthy)…they have sacrificed everything for it (their wealth),” which gives them a sense of supreme entitlement.
It’s the old rugged individualist “I-got-mine-you-get-yours snub”—despite the fact that many in this club inherited their wealth.
According to a 2010 U.S. Department of Labor report, “In terms of net worth, inheritances and gifts have historically accounted for between 20 and 50 percent of total household wealth accumulation in the U.S.” Four years later, and those figures are likely to be even higher.
Taken to the extreme, in 2012, Forbes reported that just six Walmart heirs have as much wealth as 42 percent of all Americans.
Who can even imagine that?
The bigger question is who benefits from that kind of wealth accumulation? Answer: Not the overall economy.
Side irritant: The average Walmart worker earns less than $10/hr. According to researchers at the University of California-Berkeley, in 2004, a year in which Wal-Mart reportedUS$9.1 billion in profits, the retailer's California employees collected $86 million in public assistance. That’s right, we—the taxpayers—are subsidizing the Walton family heirs and other stockholders.
Now ain’t that a kick.
But let’s get back on track.
“The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American,” says Hanauer, “but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.”
In short, the point that Hanauer is making is that there can never be enough superrich Americans to power a great economy.
The enormous sums of money that the wealthy are siphoning out of the economy to lard their scorecards and stroke their egos is depriving many of us from simply earning decent livings.
I maintain that money is the life-blood of any economy.
When money becomes too concentrated in the hands of a few and stops flowing to the many, as with blood in the body, the economy sickens.
People in the lower extremities, namely the working poor, start to falter and fail. They get cut off from the rest of the economy—and the sickness continues on up the economic ladder until even those who once thought they were comfortably ensconced in the middle class realize they’re just hanging on by a thread.
We’ve been watching this happen for more than 30 years, and no administration, Republican or Democrat, has done anything to reverse the disease. In fact, they’ve only exacerbated it with a gawd awful tax code that supports corporate welfare (think back to Walmart) rather than social welfare.
Some refer to all of this as the tragedy of the commons, meaning that individual self-interest often leads to neglect of publicly important resources.
And the United States of America has never had a more publicly important resource than its middle class. I think Mr. Hanauer and many others would agree with me on that.
So why aren’t we doing anything about it?
"Answer: Big money doesn't talk. It SHOUTS!!!"
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