Okwaisie: Demystifying the tale of the wealthy as job creators

Listen to some hard-line conservatives talk, and you might encounter two common themes: that the…Listen to some hard-line conservatives talk, and you might encounter two common themes: that the only acquaintances they ever run into are the widely loathed welfare kings and queens, and that they believe in the myth of the wealthy as “job creators.”

It’s uncommon that people have a debate about the economic direction of the country without bringing up the story of the able-bodied guy who has decided to let the government take care of him while he buys flat-screen TVs with welfare checks. You know, the guy getting the “free stuff.”

What is seldom noted in this oft-repeated argument is that welfare manipulation is not any less of a crime than tax evasion is. And since tax evasion by some has never justified everybody avoiding taxes, welfare manipulation by a few should certainly not warrant scrapping the safety net for those who need it. Welfare manipulation is a crime.

Coming back to the idea of “free stuff”: Couldn’t it be considered equally free stuff if the guy who has millions of dollars sitting in his account wakes up in the morning to find out that the government has decided to give him a few extra million in the hope that he will create jobs with it? The government is paying him not because he has done something, but because it hopes he will do something that it can’t prosecute him for not doing if he doesn’t.

In a free-enterprise society like America, anyone is free to start a business, end a business or expand any commercial activities as he sees fit, as long as he meets the standards set by law. The perception that an absolute set of people in society act as “job creators” runs afoul to the free-enterprise philosophy that so many Americans claim to hold.

If you woke up in Lothrop Hall one morning and decided you wanted to start a business, you would need two things: an idea for satisfying a demand and money. Let’s just say you have studied the trends and realized that this product or service from your idea would sell if executed properly. Step one would be complete, leaving you to figure out step two: funding the idea. This is where the promoters of the “job creators” theory find fuel for their assertions. But to assume that only rich people create jobs is to assume two things: one, that rich people are the only ones capable of hatching good ideas and two, that less affluent people with good ideas can never have access to money. Both assumptions are, of course, not true.

The second assumption particularly is why financial markets exist. They exist to channel funds from lenders to borrowers driven by the nomad stick of incentivization on all sides. Now, you might be tempted to object and argue that it is the rich whose money is floating around in the financial markets and being lent out to borrowers. That is technically false, but I get your point. The technicality lies in the fact that everyone’s money is tied in the financial system somehow from the simple checking account to the mutual fund which manages retirement accounts. Pragmatically, it is plausible to say that a bulk of the funds circulating and being lent out belongs to the wealthy in society, but that makes little difference in regard to why the funds end up in the system.

Money enters the financial system because all parties involved have their own self-interest in mind. When people open saving accounts or buy securities, they do so primarily because they want a return on their investments and not because they think it might create jobs somewhere. The commercial bank, venture capitalist or investment bank that receives the funds loans them out because they want to make more money off the interests they affix. Entrepreneurs then borrow it because they believe they can make a profit in excess of the borrowed funds. Everyone thinks about themselves throughout the process.

In this regard, a job creator can be anyone who has an idea to serve an existing market and can get access to credit from a sound financial market to carry it out. Lots of small businesses and, indeed, large corporations are started by less affluent people who had good ideas. Facebook hires people; hence, Mark Zuckerberg is not a job creator because he was a billionaire; he is a billionaire now because he was a job creator.

It is not even necessary to begin counting the vast number of teachers, professors, firemen, policemen, military servicemen, governors, mayors, congressmen and senators in order to recognize that the government is also capable of creating jobs. Thus, implying that wealthy people are the  “job creators” is flawed or — to be cynical — a plan by the elite to purloin society. Deliberately taking that flawed implication and attempting to mold public policy out of it is not only largely disingenuous, but a serious setback to the American dream — if there is still one.

Contact Daniel at dno2@pitt.edu.