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The Inequality Speech That TED Won't Show You (nationaljournal.com)
176 points by JonnieCache on May 17, 2012 | hide | past | favorite | 103 comments

From Chris Anderson's justification for not publishing it:

> But even if the talk was rated a home run, we couldn't release it, because it would be unquestionably regarded as out and out political. We're in the middle of an election year in the US. Your argument comes down firmly on the side of one party.

So now it's unfairly partisan to point out that the evidence supports one party's position but not the other's? Really?

What on earth is the point of taking an evidence-based approach to public policy issues, if not to draw conclusions about which public policies we should support?

This is what saddens me the most. We are no longer able to have any real discusion about anything anymore because pretty much everything can be stuffed into a "partisan" pigeonhole.

   -- Shrinking Middle Class == Partisan
   -- Failing Healthcare System == Partisan
   -- War on Women's Rights == Partisan
Now, on the face of it, sure, any of these topics can be construed as "partisan", but I had hoped, especially with outfits like TED, that we could get beyond that and focus on the "grey areas", the "parts in the middle", and try to have an honest intellectual debate.

But we're not allowed that anymore, even Intellectualism is partisan now since it's "so Elitist".

Welcome to the era of Politically Correct Stagnant Decline.

There's also something to be said about the novelty of the information that is presented.

TED is about exciting ideas (or at least, that's what I understand them to be).

From the talk: "In a capitalist economy, the true job creators are consumers, the middle class. And taxing the rich to make investments that grow the middle class, is the single smartest thing we can do for the middle class, the poor and the rich."

That is his "exciting idea" -- something that pretty much anyone who is interested in tax reform has heard before. There was nothing groundbreaking about it, no new information, and certainly no unique solution to the problem. It was literally a reiteration of political talking points that have existed for a very long time, which to be frank, is not very interesting. I even remember Mark Cuban blogging about this very same topic a few months ago, and this is an idea that isn't particularly unique.

Still, since he was invited to speak, I think his video should be part of TED's web site, but saying that he was bringing any new discussion to the table is quite generous.

Instead of implying that its motivations were political, TED could have simply said this: "The talk was interesting, but we had other talks we wanted to feature first." Boom. Done. No PR headaches.

I think this is a more generous summary of Anderson's intentions from the article: "Nick, I personally share your disgust at the growth in inequality in the US, and would love to have found a way to give people a clearer mindset on the issue, without stoking a tedious partisan rehash of all the arguments we hear every day in the mainstream media."

The talk didn't present anything new, so it doesn't need to be featured.

Not all the speeches make it from the conference to the website. My TedX speech also didn't make it :)

Those problems aren't "partisan topics" just because one party adamantly wants to make them worse!

> So now it's unfairly partisan to point out that the evidence supports one party's position but not the other's?

I come down way on the side of Hanauer in this debate, and agree with your point above, in general. But my reading of the speech was that it was a partisan fluff piece.

If you asked any number of my liberal college-educated friends to vamp for three minutes on the subject of "the wealthy as job-creators and drivers of economic growth" and then gave it a quick edit you'd get something comparable. The only difference being Hanauer makes a fallacious argument from authority (although I think his opinion is correct).

But isn't that exactly why TED didn't feature the talk? TED only wants its best talks on the web site, because the web site is its way of broadcasting interesting ideas (I know many teachers and professors that regularly share TED talks with students!). I understand their desire for a really well-curated collection of videos.

Considering some of the TED talks I've seen in the past, Hanauer's talk doesn't make the cut. I could've just as easily gone to MSNBC and heard the same thing -- although I agree with his opinion, his idea is neither unique nor substantiated by unique data.

I think I have a stricter definition of evidence. I saw a lot of arguments (many that I agree with generally), but not anything I would call evidence. If he wants to prove what he is saying is true, show the empirical evidence. A lot of people argue their opinion, which is fine, but in the end it is just opinion.

The claim of partisanship is an outright falsehood. The partisanship is in Chris Anderson's reason for not distributing the talk, not the talk itself. He is making it partisan, by cowing to that which we call partisanship, a thing he must surely take for granted. Maybe he is evil, too.

There is nothing partisan about it. The 1% are not a party, any more than a single senator is a party. The ability of the Corporate Rich to spin the public argument, and make it seem like there is a split conflict, that is the root of what we "end-users" perceive as partisanship. In this case, they have spun & won. The public discussion about this talk is partisanship, not the issue itself.

And Hanauer points this out. The spin of the conversation is influencing the outcome of policy. This is not new under the sun, but it is an idea worth spreading.

This is a really bizarre move by TED. If they don't release all their videos because they just don't have the capacity or whatever, fine. But to not release a video because it sort of supports one side of the political spectrum is completely absurd. I thought TED was _supposed_ to be provocative?

Shame on Chris Anderson for the poor handling of this.

The talk is interesting but the suggested solution at the end, more taxes on the rich, is highly political and no evidence what-so-ever is offered in the talk that that's the correct solution for fixing the stated inequality problem.

The problem with this argument is that job creation most definitely should not be the goal of any policy.

To illustrate how silly it is to make job creation the goal, let me share with you a very simple policy that would eliminate unemployment: Outlaw grain combines.

Without grain combines, hundreds of thousands of workers would be needed to pick things like wheat, corn, etc.

If you look at economic issues with the idea that employment is a goal, then you are bound to arrive at policies that move in the direction of this absurd idea.

Job creation != economic growth.

How about the creation of good jobs?

That would be disaster.

Good jobs are essentially highly paid office jobs with good benefits -- and the easiest way to create more of those is to outlaw the computer, which would mean that thousands of workers would be needed to do reports for companies, the federal government, etc.

But it would also destroy a great source of real wealth.

Good jobs are essentially highly paid office jobs with good benefits

Where do you get this? Take a look at the median-salary multiple for buying a house 50 years ago vs. today. Used to be you could be a grunt and buy a house.

To me, good jobs are satisfying, economically productive and reasonably well-compensated ones.

You know, the ones you get from having a well-educated and empowered workforce.

That's probably worse. A worker whose labor is worth $10 an hour is not going to benefit from a bunch of jobs that are priced at $40 an hour.

The value of labor isn't inherent, it's determined by the market. Ditch digging is worth less than programming in the market only because there are more ditch diggers than programmers. If you can afford to educate people to the point where they have the choice to do something beyond digging ditches, the value of ditch digging labor rises to more accurately reflect how difficult the work is.

Hard labor is only worth $10 an hour when a society is unable to provide enough opportunity.

Edit: What I'm trying to say is that laborers will benefit from the higher paying jobs, but only if a society can provide enough educational opportunity that it will shrink the number of people who have to do the labor.

Social mobility is the key.

While social mobility is important, look at the speed at which the economy transitions. There are tremendous costs imposed by corporate/social welfare programs that prop up industries... they insulate workers from economic reality for a while and then suddenly reality catches up.

We define ourselves by our training, our job, and we expect the economy to stand still and allow us to continue doing something we were trained to do decades ago... all the way until retirement.

We feel indignation when a job goes away, and we feel that it's appropriate to be proud of skills that the economy no longer needs. This is absurd. Learn something new.

Society provides plenty of opportunity, the problem is that people have unrealistic expectations of what amount of effort ought to result in a particular standard of living and a particular level of job security.

<i>Ditch digging is worth less than programming in the market only because there are more ditch diggers than programmers.</i>

Is that the only reason? Surely the labor supply matters, but so does the value of the work to others.

Hard labor is valuable. Sure, it's difficult to get around when your GPS software is buggy. But's its also hard to get around if nobody has built any roads.

Generally speaking, our economy doesn't accurately price in how exhausting and difficult it is to work with your hands because there's less of a barrier to entry when it comes to labor. If there was equal opportunity, there would be a larger number of people competing for white collar jobs in an air conditioned office.

But if we're not going to focus on job creation, then we need to out-and-out admit that the natural rate of unemployment has gone up and we need to supply for the unemployed.

I won't nitpick the astronomy bits, but I would like to add something historical to the discussion.

In "The Roman Empire and Its Germanic Peoples," Herwig Wolfram asks the question of why the Eastern Roman Empire outlasted the Western Roman Empire by so long. The answer he comes up with is that the Western Empire had much greater concentration of wealth in the hands of the senatorial class. This meant that it was hard to collect taxes to pay for things like an army, and at the time of the invasions of the Goths and Franks, the Eastern Empire was collecting three times in taxes what the Western Empire was collecting, and thus spending more on their army than the Western Empire was collecting in taxes.

Without sufficient tax revenues he military machine could not sustain itself, and when three senatorial households had a budgets that combined equalled the entire tax revenue of the Western Empire these super-wealthy were just too politically powerful to tax. Wolfram also suggests that this is what doomed Ostrogothic Italy when they fought the Byzantines.

Too controversial? Really? This is a pretty mainstream point of view, although perhaps not the one in political ascendancy at the moment. Hardly the stuff of censorship.

I strongly suspect there was some other reason it wasn't posted.

It does sound like it was at least a vaguely political decision, mixed with image-maintenance PR concerns, if the email excerpts from the related article (http://nationaljournal.com/features/restoration-calls/too-ho...) are genuine.

Fwiw, TED doesn't publish all talks, especially not all TEDx talks, so it's not as if this was singled out to be suppressed. But it sounds like it wasn't selected for publication due to a mixture of: 1) Anderson personally disagreeing with its politics; and 2) TED's attempt to carefully manage its image on anything political, which involves closely planned and timed releases of things like the two "political" videos they did publish, on global-warming and contraception.

The main PR mistake TED made, afaict, was to say enough to give an impression that it was political. If it just got lost in the shuffle, like most TEDx talks do (few are posted on ted.com), it'd be one thing, but Anderson arguing against points in the talk, and then giving the impression that it was scheduled and later pulled due to partisanship concerns, created a fiasco where one wouldn't have existed.

Well, according to the article, Anderson didn't personally disagree with its politics. That's what makes it interesting to me.

> "Nick, I personally share your disgust at the growth in inequality in the US, and would love to have found a way to give people a clearer mindset on the issue, without stoking a tedious partisan rehash of all the arguments we hear every day in the mainstream media.

My suspicion is that it just wasn't that good. This was given at a TEDx event, not an official TED conference, which means they have no control over the content and are pretty free to not post it. Only a few of the TEDx talks ever make it on the TED.com website.

And you are right, this is hardly controversial. You couldn't find a politician who would disagree that a strong middle-class is the backbone of our society.

The sound bite that stuck out most to me was

    For instance, it is a small step from "job creator" to "The Creator".
    We did not accidentally choose this language.
Weird leaps of logic and data that don't directly support an argument regarding job creation are sufficient reason not to feature this talk (in addition to the partisan rhetoric which is verboten for TED).

While the wording could use some work, it is something to think about. When people ask what I do my general response is, "I destroy jobs". I could just as easily say, "I create wealth" or whatnot, but for people stuck in the mindset that job's are created when work needs to be done it's an accurate statement.

The reality is, the idea of a 'job creator' is somewhat ridiculous, but the language was chosen for a reason which is worth examining.

It probably isn't the content, but the one-sidedness. Tying loss of the middle class to tax policy is a political statement, and probably not even correct - or at least he didn't give much evidence for it.

I happen to agree taxes on the rich should go up, but that's not the point

He pointed out how falling taxes on the rich correlated with a decline of the middle class. But that could just be coincidence.

I could point out that the largest expansion of the US middle class on record happened during the 1950s when the top personal income tax rate was over 90%. But that could just be coincidence as well.

I can point out that economic theory says that the economic impact of giving a person a dollar is directly connected to their likelihood of spending it. Since the rich are less likely to spend than the middle class and the poor, taxing them hurts the economy less than taxing anyone else. But once you descend into economic theory, everyone has a theory and an argument and you get a morass that normal people can't make heads or tails of.

I could point out that the Republican ideology that less taxes on the rich is always good has exactly no evidence supporting it. That's a very thin amount of evidence for the huge social experiment that we're currently running in this country. But once you descend into politics everyone already has their minds made up, so that's a lost cause.

All of which begs the real question; if the proposition is true, what evidence would suffice to actually convince people of it who are not already convinced?

The highest marginal tax rate was over 90%, but very very few people paid it. The tax code was loaded up with deductions, only direct compensation was taxed, and you could still easily convert wages into capital gains, which even in that time were significantly lower than wage rates.

The highest marginal tax rate was over 90%, but very very few people paid it.

More precisely, that was the marginal rate on income over $1 million/year. That would be about $5-6 million in today's dollars. Given much lower CEO compensation at the time, very few people encountered it. (And given those taxes, CEOs had less incentive to increase their salaries.)

The tax code was loaded up with deductions

Deductions have a tendency to accumulate over time. There were a bunch of deductions, but fewer than today.

only direct compensation was taxed, and you could still easily convert wages into capital gains

Theoretically true, but historically stock options were a much smaller portion of executive compensation than is the case today. See http://faculty.chicagobooth.edu/workshops/AppliedEcon/archiv... for a reference. (Incidentally their estimate is that only about 30% of the raise in CEO compensation is due to shifts in taxation policy.)

which even in that time were significantly lower than wage rates.

Massively so. If your ordinary taxes were over 50%, you could opt a 25% capital gains rate.

> More precisely, that was the marginal rate on income over $1 million/year

There has not been a bracket that high since 1941. http://www.hkmscpa.com/hist%20tax%20rates.htm#5

> (And given those taxes, CEOs had less incentive to increase their salaries.)

Of course. So they just gave themselves company cars and executive washrooms and million dollar desks.

> Deductions have a tendency to accumulate over time. There were a bunch of deductions, but fewer than today.

We got rid of a bunch in the early 80's. As a simple example, all interest (not just interest on primary housing) was deductible before then.

> but historically stock options were a much smaller portion of executive compensation than is the case today

I wasn't suggesting stock options. You don't have to rely on stock options to convert your salary into capital gains. If you were a doctor or a lawyer pulling down a lot of money, you just formed a company and left the money you weren't consuming immediately in the company's bank account.

That's not true.

Few people paid the 90% rate because the income bracket was so high that few people actually made enough money to fall into that bracket. The tax code had fewer deductions in the 1950s then it does now. All compensation was taxed back then, not just direct compensation. And it was much harder to convert wages into capital gains because they defined compensation much more strictly than they do now.

Capital gains rates were not lower than ordinary income rates, however, they used an "exclusion" system (similar to a deduction) that lowered the effective rates to what would be today's ordinary income rates.

Actually capital gains rates were actually lower for top income individuals.

More precisely, you could exclude half your capital gains income, or opt to have all of your capital gains taxed at an alternative rate of 25%. Most people would choose the former, but top earners could benefit from choosing the latter instead.

All compensation was taxed back then, not just direct compensation. And it was much harder to convert wages into capital gains because they defined compensation much more strictly than they do now.

This just isn't right. It was a significant change when, for example, the company car became a taxable benefit. Now employers can't pay for your schooling without paying taxes on it.

Almost everything (except for health insurance) gets taxed today.


It took Western civilization something like 4000 years to write an equation for gravity, a phenomenon exemplified by millions if not billions of examples, each of systems consisting of one moving part. And that was just a description, Newton didn't begin to say _why_ it worked.

Economics necessarily depends on subjective judgment, which doesn't exclude rigor, but does include the possibility that any given set of experts is vulnerable to distortions in judgment from their own political preferences and personal ambitions.

Which means anyone leaving it to these experts is doomed. If you don't understand the basics of the methods and theories well enough to detect when things aren't adding up, you'll just go wherever they lead. And, surprise! most politicians, lacking understanding, discover that the most convincing economists happen to have the prescriptions most convenient politically. A review of the policy sustainability of the world's industrialized economies shows how well that model has worked out. Not convinced? Ask yourself how well Congress would do writing an operating system, an undertaking conceptually much simpler than managing the US national economy.

The problem isn't evidence, or even theory. It's the generally low level of understanding and the dishonesty of the discussion, on all sides.

Increases in taxes tends to shift more and more activity into tax avoidance schemes rather that economically productive ones. See Parkinson's book "The Law and the Profits" for the classic treatment of this.

The fact that people try to avoid paying taxes does not mean that we should never charge them.

Also in recent decades the most successful tax avoidance system has been the systemic pressure from Grover Norquist and allies to reduce taxes at every opportunity and never, ever, let them come back up. We're now at historically low tax rates with a broken budget. Raising taxes can't solve the underlying fiscal problems by itself. But a refusal to do so does make them impossible to solve. (At least without a dramatic restructuring of our country that most would not like.)

But what if the root cause of a middle class decline is "routine" jobs being automated and outsourced? That's what my lay-reading of the Economist over many years tells me, though I'm not in the field.

In that case, tax policy may dampen or slow the decline, but won't fix it.

I agree with almost everything you say, but I think your first two paragraphs only imply that expansion is relatively insensitive to tax rates (so republicans' tax paranoia is unwarranted).

But is it good evidence that raising tax rates today would substantially improve the situation of the middle class? I don't think it is.

Your pedantry is wrong.

Languages are defined by usage, not by some proscriptive description. It is true that "begs the question" is the name of a specific philosophical fallacy that has been discussed for millennia. However in English it is common to say "begs the question" where you mean "raises the question", and therefore that is acceptable usage among native English speakers. (I don't know where that usage came from, at a guess it is a shortened version of the phrase "begs us to ask the question". Anyways it is common usage.)

Now did you have a comment on the actual content of what I said?

The usage is correct. To beg the question is to ask the audience to accept a proposition stated in the question without having first provided evidence supporting the proposition. This is exactly what the OP does, where he states "if the proposition is true..."

I dunno.

The New York Times regularly posts hand-wringing debates between "the usual suspects" on this issues.

Everybody in these debates seems to take it for granted that taxing the rich will hurt economic growth, but maybe just maybe there are some benefits to equality that will make up for that.

Nobody mentions that an economy has a hypothetical failure mode (like the game of Monopoly) where all of the money ends up in one person's hands -- and then trading stops.

Nobody mentions that an economy has a hypothetical failure mode (like the game of Monopoly) where all of the money ends up in one person's hands -- and then trading stops.

Huh? I'm having a really hard time imagining how this could possibly happen. Does that person not ever need to buy anything? If they don't buy things they're taking that money out of circulation, and if you have a central bank targeting anything (or free banking, or most banking systems humans have tried) the people who can make more money will make more money in order to hit their targets. I'm pretty sure that nobody mentions that because the idea is, well, pretty ridiculous.

The single person owns robots who perform every task he desires at a cost lower than human subsistence wages.

Of course, even at that point the remaining humans can just form an economy among themselves which the rich man doesn't participate in...

Someone having money doesn't preclude someone else in the economy from CREATING VALUE. Hacker News is a site filled with people who understand that it's possible to create value out of nothing. Your scenario is impossible, but assuming someone acquired all of X currency and refused to let anyone else have any, that currency is effectively nonexistent - currencies are only worth what they can be exchanged for. People would trade using something else.

People would, but that wouldn't alleviate the overarching economic failure of excess concentration. Look at places like North Korea; there's an underground economy, but virtually all economic power is vested in the state, with dreadful effects for the population at large. Well, you say, that's not a free society in political terms; but preservation of ownership is essentially a political good. Indeed, it's one with a high cost for the American economy: http://tuvalu.santafe.edu/~bowles/GarrisonAmerica2007.pdf

It's not as ridiculous as you think. Yes that person needs to buy stuff, but not enough stuff to support an entire economy.

"Nobody mentions that an economy has a hypothetical failure mode (like the game of Monopoly) where all of the money ends up in one person's hands -- and then trading stops."

Stunning level of ignorance.

I don't think the point is to offer this literally as a likely outcome.

If I interpret the parent correctly, the point is more to argue that there has to exist some level of inequality which even the most hardened libertarian would agree is sufficiently bad for the economy to justify an intervention. Hence reducing it to a question of degrees, a trade-off rather than a pure matter of principle.

If one person has all the money, wouldn't the government just got an (literally) print more money?

The pre-existing money would be massively devalued, sure, but it's only one guy affected so who would care?

Apparently it's too partisan: "This idea is an article of faith for republicans _and seldom challenged by democrats_ and has shaped much of today's economic landscape."

I've seen a few mentions about this fairly inane speech -- smells like PR/astroturfing to me.

Frankly, whenever I hear the phrase "job creation" I tune out immediately, because I know that nothing intelligent will follow that phrase ever.

People hire people to do things when they have work to do. You "create jobs" by increasing economic activity. The problem is, business these days is all about consolidation and labor arbitrage.

You can't just declare a speech insane without a good reason, especially if it more or less agrees with what you state just next...

Edit: although i don't know how to read (insane vs. inane), this does not fundamentally changes anything in context...

The tone of the article implies that TED is somehow suppressing the dissemination of this speech because it's content is somehow too controversial to handle.

I declare it inane because the speech described by the article isn't very controversial at all.

Duff said inane, not insane.

inane != insane

Buy a dictionary :-)

Realy Guys I give the poster who did not know the diference bwtween inane and insane - some valid feedback instead if insulting his lack of knowledge of english and I get voted down?

Perhaps he simply misread, it happens. To assume he doesn't know the difference and then suggest he "buy a dictionary" is a tad bit rude, which may account for the downvotes.

Sir, you have hit the nail on the head.

It was the work of the disgruntled speaker whose talk was refused in a normal editorial process and who proceeded to hire a PR firm to create this ruckus.


yesterday's comment thread on reddit pretty much covered this:


basically, this talk is mostly partisan and not supported by a lot of data. this TEDtalk, on the other hand, is:


From the reddit thread (which I just read through) a TED organiser responds http://www.reddit.com/r/politics/comments/tqi15/too_hot_for_...

"TEDChris 21 points 9 hours ago

Chiming in here, as TED's Curator..

First of all, thanks for all the attention. Glad you guys care.

We do too. Income inequality is a huge issue. Most of us here at TED are pretty passionate about it.

The trouble with this talk is that it tackled the issue in a way that was explicitly partisan, framing it as a critique of "an article of faith" for Republicans. TED is avowedly non-partisan. We want to share ideas in a way that brings people together, doesn't throw sand in their faces.

We release one talk a day on our home page, and that talk is pretty much guaranteed 50,000-100,000 views within 24 hours. Every day there are numerous amazing talks competing for that slot. We have to make the best call we can. Talks that aren't selected aren't being censored, any more than the NYT (or Reddit) is censoring a story it decides isn't appropriate for its home page.

The text from this particular talk is already out there. You can make your own judgement.

Thanks, and let the discussion continue. We're listening. "

False dilemma fallacy


You can't attribute the existence of "jobs" exclusively to "businesses" or exclusively to "consumers", because "trade" definitionally requires the existence of two parties.

I don't think this is the issue addressed in the talk though. The question he was responding to was "does having lower taxes on the rich create jobs?". He argues that it does not, but that lowering taxes on the lower and middle class probably would.

It's not about putting all the blame on one side or the other, it's about the factual question of whether a particular policy improves or worsens the job situation.

He argues that position by repeatedly making the assertion that consumers create jobs and businesses do not:

> only consumers can set in motion this virtuous cycle of increasing demand and hiring.

>the true job creators are consumers

It's a tad nonsensical, all economic exchanges definitionally require the existence of two parties to occur, both parties are essential regardless of the good or service being traded. One can easily take the opposite position to the speaker, that production precedes consumption, because in the state of nature man must first produce and labor for his or her own survival before surplus exists with which to trade. Either way, it's not a sufficient basis for asserting normative proposals in regards to tax policy.

This of course true. Except in our economy, isn't the onus on the businesses to attract customers? I would say that therefore businesses are more responsible for job creation (because they are the ones creating value) than consumers who are merely determining which businesses have the best offerings.

The only thing I can see not working this way would be an extreme version of kickstarter, where consumers would put out a bounty for a specific product or service and have businesses form to provide it. At that point, they would be more actively "creating jobs."

Thank you. It always irritates me when complex (or at least somewhat complex) issues are boiled down to simplistic notions.

Yet taxes on the rich are indeed cut in real life via this exact rationale.

Is this comment intended to be a critique of the speech, or in concurrence with the speech?

"So here's an idea worth spreading.

In a capitalist economy, the true job creators are consumers, the middle class. And taxing the rich to make investments that grow the middle class, is the single smartest thing we can do for the middle class, the poor and the rich."

Not saying I disagree, but I remember a few years ago when the economy was booming all over the world, there was this discussion about how bad "consumerism" is for our societies.

So which is it then? Is consumerism a bad thing because it makes us buy all sorts of dumb things, or is it good because it enriches everyone? Or is there another alternative?

I think it's a bit nuanced. Consumerism, from an economic perspective, can be a fast, efficient driver of economic growth. However, it often isn't sustainable growth (not just ecologically -- the American "Manifest Destiny" growth wasn't sustainable because explorers hit the Pacific and ran out of land).

In addition to the lack of sustainability (adding back in the ecological issues), consumerism seems to drive a general cultural malaise wherein the people try to find meaning by buying crap, rather than living fulfilling lives.

IMO, consumerism is detrimental in the long run to people's mental health and the environment (and it's not sustainable); however, it has been shown to be a solid driver of economic growth.

>That's why I can say with confidence that rich people don't create jobs, nor do businesses, large or small.

This argument only considers half of the problem. Yes consumers are needed to create jobs but what is needed to create consumers? Jobs. You can't be a consumer without an income, and for the vast majority of people, you don't have an income unless you have a job.

Therefore for failing to acknowledge this fundamental, very simple and might I say, quite obvious fact, I think it's fair to say Nick Hanauer's reasoning is at best weak, and at worst disingenuous.

It makes one wonder what his motivations really are. Attention seeking contrariness? A desire to ingratiate himself with the 99%?

Yet you just made no argument for why his arguments are weak, while yours are: jobs create consumers and consumers create jobs, but in your equation absurdly rich people and increasing inequality does not seem to be needed...

My very first sentence explains why I think his argument is weak.

I agree, I have stated no position on the absurdly rich and increasing inequality. I think it is unnecessary to stray into this area in order to prove or disprove whether businesses or the wealthy create jobs. Either a business or a wealthy person can or cannot create a job regardless of the taxation laws du jour. He has categorically stated that they cannot. I think this is totally incorrect.

> "He has categorically stated that they cannot."

No, he stated that they do not. Businesses don't hire employees they don't need. They can, but if they try it at any appreciable scale relative to their business, they will go out of business.

It's not about what can happen. It's about what does happen. And what does happen, is that employers hire employees when they need them. Not just because they've made money, nor just because they got to keep more of the money they make via changes in taxation.

They could. But they don't. There's decades of data and research on this. It's not really debatable. Tax cuts do not translate into jobs. It's never happened. The increase in wealth of the wealthy does not translate into jobs. It's never happened. Consumer demand and business expansion to meet that demand, does translate into jobs. It always happens.

The question is how, or even whether you should try, to stimulate consumer demand when unemployment is high. (And the follow-on: what problems does that (in)action create)

Ok, let's get back to the basics, because everybody looks like they lost it when they start discussing this

"rich people don't create jobs, nor do businesses, large or small."

Ok, where to start

You can have "a job" essentially in two ways:

- Being self-employed (doctor, lawyer, etc), or create your own company. This is usually the minority of people

- Having a job at a company

So, yes, companies create jobs, next

Big companies create more jobs (per 'unit'). Smaller companies create less jobs (per 'unit') but combined they make more jobs in total.

Companies create an opening because of: increased production (or more customers, in case of services), new line of business. This is ignoring regular turnaround where someone quits to go somewhere else and someone is hired to replace.

Hence, new jobs comes from: - New products / services

- More people consuming existing products

(we could add loss of efficiency as well)

Now, bigger companies have a much easier time hiring new people. HR is set and knows the drill, they usually can accomodate new people with their existing profits (maybe not a lot, still)

Smaller companies have a much harder time hiring another people. Suppose you are a one man company, and you want to hire someone. You have to be HR (this cuts into your time). You may be not sure if adding this person is going to increase the profits enough to cover for the extra costs, etc

So when you cut taxes to all companies, sure, you're helping the big guys, but also the small guys.

The rich have an easier time dodging regulation or sending their profits to Ireland and back, but not the small guy

"And taxing the rich to make investments that grow the middle class" (from the article)

Yadda yadda yadda. You want to grow the middle class? Reduce taxing on them!

But the government won't do it, because the middle class (still) has the most money available (amount of people x taxes payed by each one) and the least resources to avoid them.

Maybe a more logical extension of where you could go with "only considering half the problem" is that the wealthy often put up the initial capital to create the enterprise that then sells to consumers. Salary earners tend to have a harder time creating enough spare capital to execute against an opportunity even if they see it.

The wealthy will only bother to put up capital if they're more interested in earning money than in holding on to it.

Your willingness to tolerate risking x% of your wealth goes down as you get wealthier.

Elon Musk is a good example.

Elon Musk is the exception that proves the rule.

Well, for those who agree with the talk's sentiment, it having not made the cut is probably the best thing that could have happened to it. Now it will reach way more people under the false assumption that it was "censored".

Chris Anderson just tweeted this link to a blog post explaining the story from his side. The taped talk is linked from there. http://bit.ly/KU2Rmu

The shrinking of the middle class is something we should all be concerned about.

But it isn't caused by tax policy: outsourcing and automation of traditional "middle class" jobs are a much bigger force.

We really need to figure out what the middle-class jobs of the future look like. What is above menial service job like retail, and below specialized trades like software?

Even people with college degrees struggle to get into the middle class these days. That should scare us all.

I have no answers to this, but I'm pretty sure tax policy isn't going to fix it, nor would protectionism.

The shrinking of the middle class is something we should all be concerned about.

What's the evidence that the middle class has really shrunk? There's certainly evidence that the very highest incomes have climbed substantially since, say, 1980, but can you find numbers that suggest that there are fewer households making at least middle class incomes? Here's a good bit from a guy at Brookings earlier this year:


Krueger’s claim of a shrinking middle class relies on the same peculiar definition. Specifically, “middle class” is defined as having a household income at least half of median income but no more than 1.5 times the median. I re-ran the numbers using the same definition and data source as Krueger and found that the entire reason the middle class has “shrunk” is that more households today have incomes that put them above middle class. That’s right, the share of households with income that puts them in the middle class or higher was 76 percent in 1970 and 75 percent in 2010—two figures that are statistically indistinguishable.

Economists know a lot about how to create wealth. They know very little about creating jobs.

Jobs are temporary inefficiencies and a lot of economic growth comes when you get rid of them. We've automated most of our farming, but we don't have 90% unemployment because all the farm jobs went away.

One thing is how fast technology grows related to how fast workers can adapt. 'Race Against The Machine' is a thesis that technology is now growing so fast workers can't keep up. I don't know if I buy it, but it's something to keep in mind.

I don't know if your statement about economists is intending to be a factual statement of economists' view of the state of economic science, or your opinion on what modern economic theories are good at. It's not clear to me personally, to be frank, that economics know a lot about how to create wealth either.

That said, this is not an acknowledged weakness -- Keynes' magnum opus was The General Theory of Employment, Interest and Money, which spells out in great detail how these things are related. The core of this theory is still widely held in economic circles, which is why the mandate of the Federal Reserve keeps shifting from "controlling inflation" to "maximizing employment" -- because this is thought to be something that is controllable through manipulation of interest and money.

I was under the impression that the rich pay a much greater share of income tax than when their rates were higher. Can someone check me on this?

Technically that's correct, but it's a red herring. The top 1% currently take a little over 20% of the total income in the country and pay about 40% of federal income taxes. From the end of WW II to the 1980's, the top 1% took between about 8% and 12% of the total income in the country and their share of the tax burden was lower. The federal tax base was also much wider since there were far fewer tax credits available to average people and there weren't any common refundable tax credits.

If less taxes for rich should create more jobs, then, why is there more unemployment than ever, while we have lesser tax for rich than ever?

I can't understand what is wrong with this question? Its based of real world data, right?

The short answer is that "making jobs" is a complete mystery to most economists. Aside from the government directly hiring people to bury jars full of money, no one knows how to make it happen.

It doesn't stop politicians of all stripes from pretending that they have the magic answer, and that the politicians from the other party are a bunch of nincompoops.

Gee, you mean to say that what we've been doing is the wrong thing? Funny, because all the rich greedy people seem to be loving it.

Greed will be the downfall of western civilization. This message will not reach those with the power to fix it. It's their death, they know it, and they're just in a race to bleed the USA out and run. Or maybe I'm giving rich people too much credit and they're really just greedy idiots who don't see the consequences of their actions. In any case, we're screwed.

This is the most important part of the talk:

"I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated."

This is what some people fail to understand and it boggles my mind.

To which the standard debate-derailing answer is 'raise taxes, and nobody will be able to buy private goods, therefore more taxes are bad.' A great many tax objectors have convinced themselves that they are already groaning under a massive tax burden.

I agree with them in one respect: there are too many taxes, fees, levies etc. People overestimate the amount of tax tax they pay in many cases, but they see so many government charges (whether federal, state or local) that they feel they're being nickel-and-dimed to death.

What does it even mean to say "creating jobs"?

A 'job' is something that you 'do', in this context, for a wage. So to "create a job" is to cause a need for something to be done, e.g. breaking a window "creates a job".

So we don't want to "create jobs"!

There are certainly lots of people right now who are looking for gainful employment. Let's reframe the problem in terms of figuring out how to get them doing stuff that actually needs doing. I think that means creating things of lasting value, not just throwing money around to stimulate ourselves.

TED can't show this because they're supported by advertisers, which means they'll never really be free to spread ideas if they go against the will of these companies: http://conferences.ted.com/TED2012/sponsors.php

Americans tax payers are a trampoline for globalizing these corporations through subsidizing their R&D, bailing them out and soldiering their resources abroad. These corporations have global consumers now, the health of the American consumer isn’t a priority.

Not particularly interesting. Just someones opinion, the masses won't push for any major change around any possible wealth divide (if it exists or not). No one goes for extremes

Sigh... This thread, again?

I had missed the previous one; for anyone else likewise having done so, here it is: http://news.ycombinator.com/item?id=3983598

time for an OpenTED

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