snopes.com  

Go Back   snopes.com > SLC Central > Soapbox Derby

Reply
 
Thread Tools Display Modes
  #1  
Old 01 April 2013, 10:59 PM
Saint James Saint James is offline
 
Join Date: 16 July 2007
Location: Ventura, CA
Posts: 1,259
TV Banned TED Talk: "Rich people don't create jobs"



I posted this in soapbox as I can find it confirmed from a number of news sources. I guess it's a little old of a news story (chow if necessary), but I couldn't find any mention of it on these boards, so I figured it was worth discussing.

I don't see anything here all that controversial - except perhaps in the sense like evolution is 'controversial' because a few people fanatically disagree with it; speaking of which, unorthodox views of evolution are allowed at Ted, such as this one on aquatic apes.

Two different questions here - is there anyone here who really finds these concepts (that the economy is powered by the flow of money through the middle class) inaccurate, or even so remarkably controversial as to bar from a site that is usually open to the marketplace of ideas; and what the heck is going on here? And does it show an ignorance of the Streisand effect?
Reply With Quote
  #2  
Old 01 April 2013, 11:50 PM
Richard W's Avatar
Richard W Richard W is offline
 
Join Date: 19 February 2000
Location: High Wycombe, UK
Posts: 26,295
Default

Who is it that says this talk is "banned"?

I agree with what he says - and it's about time that these ideas are recognised by politicians (I won't say "become mainstream" because I think they already are; they're certainly not "anti-capitalist" in any way). Similar things are being said by others - I've a book which I've not read yet, The Spirit Level by Richard Wilkinson* and Kate Pickett, which I think makes similar points. I just wondered why it should be called "banned". Is it just a way to attract attention, or has it been suppressed in some way, perhaps by the organisers of TED? That seems unlikely. Maybe they deliberately omitted it from the website?

I see these questions are answered by TedChris in his "The Untweetable" blog (good God, that's a horrible term; I dislike him already. To imply that something which takes more than 140 characters to say is somehow subversive is ridiculous). Either way, the link is here. Apparently they chose not to post this talk on the front page of the blog:

http://tedchris.posterous.com/131417405

Quote:
But it framed the issue in a way that was explicitly partisan. (The talk is explicitly attacking what he calls an article of faith for Republicans. He criticizes Democrats too, but only for not also attacking this idea more often.) And it included a number of arguments that were unconvincing, even to those of us who supported his overall stance, such as the apparent ruling out of entreprenurial initiative as a root cause of job creation. The audience at TED who heard it live (and who are often accused of being overly enthusiastic about left-leaning ideas) gave it, on average, mediocre ratings - some enthusiastic, others critical.

At TED we post one talk a day on our home page. We're drawing from a pool of 250+ that we record at our own conferences each year and up to 10,000 recorded at the various TEDx events around the world, not to mention our other conference partners. Our policy is to post only talks that are truly special. And we try to steer clear of talks that are bound to descend into the same dismal partisan head-butting people can find every day elsewhere in the media.
"A pool of 250+"... each year, not each day. Every one of them could be posted, and still have over a hundred days to spare. Disingenuousness again...

The overtly partisan bit is, I suppose, fair enough since the speaker mentions "the Republican party". This also potentially makes it less relevant to an international audience - or it would, if what he was saying wasn't true regardless of politics. I don't care which of your parties in the USA says what...

*A different one, not me.
Reply With Quote
  #3  
Old 02 April 2013, 12:16 AM
Wintermute's Avatar
Wintermute Wintermute is offline
 
 
Join Date: 04 July 2003
Location: Walnut Creek, CA
Posts: 6,535
Default

Every job I have ever had was created by a rich person. Either directly or indirectly. Someone has to cough up and risk the capital to make the job happen.
The continued success of the company depends on providing a product that people want to purchase which rewards the person who created the jobs or shAreholders.

I've never had a poor person offer me a job. It's interesting to note he makes his money off providing capital to others.
Reply With Quote
  #4  
Old 02 April 2013, 12:34 AM
Steve Steve is offline
 
Join Date: 19 October 2002
Location: Charleston, SC
Posts: 4,869
Default

Some of his points confuse me a bit. He points out that rich people don't consume as much, per dollar earned, as the middle class. I can see why that's a problem now when we have a demand problem, and if he argued that a tax cut for the middle class and poor would be beneficial in the short term I'd see his point. But as far as I can tell he's saying that the generally high savings rate of the wealthy doesn't create jobs over the span of decades, and that doesn't make sense. The idea that the economy is better served over the long haul by consumption rather than investment doesn't make much sense.

And the Spirit Level doesn't really deal with the economy from a demand point of view. It's about how more equal societies are, overall, happier so that even the wealthy who fund the welfare state are better off. (Also I'd sort of thought that your last name was Wilkinson and wondered if you were related to the guy who wrote it. Well, now at least I know that you aren't him.)
Reply With Quote
  #5  
Old 02 April 2013, 01:14 AM
Beachlife!'s Avatar
Beachlife! Beachlife! is offline
 
Join Date: 23 June 2001
Location: Lansing, MI
Posts: 28,569
Jolly Roger

Quote:
Originally Posted by Richard W View Post
...
"A pool of 250+"... each year, not each day. Every one of them could be posted, and still have over a hundred days to spare. Disingenuousness again...
Did you just take a quote, shave off the part where he states the number at well over 10,000 and then use the first part of the quote to call him disingenuous?

Regarding the OP, I see his point, but I listen to a lot of TED talks, and this one doesn't strike me as remarkable.

But, I have to admit, my first thought was that the people at BurgerKing wouldn't make burgers if people didn't buy them, but the customers still don't make the burgers.
Reply With Quote
  #6  
Old 02 April 2013, 03:28 PM
Wintermute's Avatar
Wintermute Wintermute is offline
 
 
Join Date: 04 July 2003
Location: Walnut Creek, CA
Posts: 6,535
Default

Quote:
Originally Posted by Beachlife! View Post
But, I have to admit, my first thought was that the people at BurgerKing wouldn't make burgers if people didn't buy them, but the customers still don't make the burgers.
and places like BurgerKing wouldn't be around if it wasn't for a person of means throwing the capital out there. In the modern world it takes a rich person to get most business off the ground due to the capital cost.

If we really want to change that then taxing the rich isn't the answer. The real answer is making more capital available to people who want to start a business. Have you seen the requirements to get an SBA loan? and typically you have to put your house up as a collateral.

We have created an environment where you have to be rich to create jobs because they're the only people with the capital resources to start a business.
Reply With Quote
  #7  
Old 02 April 2013, 08:53 PM
snopes's Avatar
snopes snopes is offline
 
Join Date: 18 February 2000
Location: California
Posts: 109,650
Jaded

Quote:
Originally Posted by Wintermute View Post
We have created an environment where you have to be rich to create jobs because they're the only people with the capital resources to start a business.
I created my own job (as well as others), and I did it without being rich or depending on any large capital investment.

QED.
Reply With Quote
  #8  
Old 02 April 2013, 10:46 PM
thorny locust's Avatar
thorny locust thorny locust is offline
 
Join Date: 27 April 2007
Location: Upstate NY
Posts: 9,523
Default

Quote:
Originally Posted by Wintermute View Post
Every job I have ever had was created by a rich person. Either directly or indirectly. [. . . ]

I've never had a poor person offer me a job.
While I've never been offered a job by somebody who was dead broke, I have a number of times been offered jobs by people who were very far from rich.

http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24

Quote:
Small firms:
• Represent 99.7 percent of all employer firms.
• Employ half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Generated 65 percent of net new jobs over the past 17 years.
• Create more than half of the nonfarm private GDP.
• Hire 43 percent of high tech workers ( scientists, engineers, computer programmers, and others).
• Are 52 percent home-based and 2 percent franchises.
ETA: Much of the farm private GDP is also produced by people who are not making very much money, but who nevertheless often hire other people.

http://www.ehow.com/about_5229133_bu...omparison.html


Quote:
According to a 2009 PayScale survey, a female small-business owners' average annual salary is between $25,000 and $70,000. A male small-business owners' average salary falls between $50,000 and $100,000 per year. The average annual salary of an owner with one to four years' experience is $35,000; five to nine years' experience, $40,000; and 10 to 19 years' experience, $45,000.
Reply With Quote
  #9  
Old 02 April 2013, 10:50 PM
Lainie's Avatar
Lainie Lainie is offline
 
Join Date: 29 August 2005
Location: Suburban Columbus, OH
Posts: 74,479
Default

Quote:
Originally Posted by Wintermute View Post
If we really want to change that then taxing the rich isn't the answer. The real answer is making more capital available to people who want to start a business. Have you seen the requirements to get an SBA loan? and typically you have to put your house up as a collateral.
You do realize that SBA loans are funded with tax dollars, right? ETA: Making more of that capital available would require taxing somebody more. And surely you're not suggesting that we lend tax dollars without collateral.
Reply With Quote
  #10  
Old 02 April 2013, 11:41 PM
Hero_Mike's Avatar
Hero_Mike Hero_Mike is offline
 
 
Join Date: 06 April 2005
Location: Phoenix, AZ & Hamilton, ON
Posts: 7,267
Canada

Quote:
Originally Posted by Wintermute View Post
Every job I have ever had was created by a rich person. Either directly or indirectly. Someone has to cough up and risk the capital to make the job happen.
So you've never worked for the government? Or does being in the military, or in law enforcement, not count as being funded by the citizens of a country?

(Poor people may not have paid taxes, but they still get to vote!)
Reply With Quote
  #11  
Old 03 April 2013, 01:24 AM
Errata's Avatar
Errata Errata is offline
 
Join Date: 02 August 2005
Location: Santa Barbara, CA
Posts: 13,160
Default

An economy needs both supply and demand. There have to be people starting businesses to meet needs, but there also have to be unmet needs providing opportunities for business.

In theory, either side of the equation could be the limiting factor on economic growth. It's entirely theoretically possible to have a world where the lack of capital is what stifles economic growth. The only problem with that model is that it doesn't match the economic reality that we're living in. In our world there is tons of capital floating around out there looking for good investment opportunities, but a lot of it is basically idle since many of the markets are already saturated with more capital than legitimate opportunity to productively invest that capital.

To create demand for those businesses to invest for, you need an affluent middle class as a market for your products, and as the majority of non-wealthy Americans have seen their incomes and wealth stagnate, the consumer market for new businesses has not kept up with the amount of capital out there to invest.

Money is cheap these days. The prime rate for a loan has been near zero for years. People aren't taking them up on it, because they don't have good opportunities that they need that money for.

With a brilliant idea, one can create new opportunities that did not previously exist. That's the basis for most of the high tech industry. The people who have those ideas may end up rich. But they do not need to be and most often are not especially rich when they have the ideas and start doing the work. The ideas don't come from money. The ideas come from intelligence, education, and hard work. Money may or not play a role in getting the business started, but there are plenty of venture capitalists competing for the best ideas.

The rich people don't create that opportunity, they just facilitate it, and if it wasn't one rich person it would be another. Not unlike rank and file employees. The product wouldn't exist without them, yet if it wasn't those employees the business could hire someone else to do the same thing and get essentially the same results. Fiscal conservatives have no problem understanding how replaceable entry level employees are, but they seem to have trouble applying the same logic to rich investors, who they would prefer to think of as much more indispensable than they really are. Sometimes the rich person and the person with the ideas are one and the same, but that is far from always the case, and either way it's the person with the ideas creating the wealth, not necessarily the person with the money.

Quote:
Originally Posted by Wintermute View Post
Every job I have ever had was created by a rich person.
My boss was worth around $100 million when I was hired, more now. But he wasn't rich when he started the business. The growth of his business both created the jobs and made him rich. But at the start of that were his ideas and hard work, not his wealth. There was a rich investor involved at the start, but he held the company back and the rest of the company forcibly bought out all his shares (at great profit to him, but not as great profit as he would have had if they had let him keep his shares longer). The person with the money did not contribute any great ideas, and if it weren't for them it would have been some other investor on similar terms. There is money out there for people with ideas.
Reply With Quote
  #12  
Old 03 April 2013, 01:45 PM
Lainie's Avatar
Lainie Lainie is offline
 
Join Date: 29 August 2005
Location: Suburban Columbus, OH
Posts: 74,479
Default

Some of the small business owners who've hired me have been far from rich.
Reply With Quote
  #13  
Old 03 April 2013, 02:20 PM
Richard W's Avatar
Richard W Richard W is offline
 
Join Date: 19 February 2000
Location: High Wycombe, UK
Posts: 26,295
Default

A lot of rich people get that way by buying, selling and merging existing businesses. Usually that decreases the number of jobs available compared with having lots of smaller independent businesses. One larger company can use economies of scale for "efficiency", which in this context usually means getting rid of jobs. There will be fewer independent managers and owners, and more of the money being funnelled upwards.

Surely most companies will try to employ the minimum number of people they can. If there are lots of small businesses that still adds up to more people than a few multinationals, though.

Even if you do found a successful company that grows at the expense of its rivals, it might reduce the overall number of jobs when rivals go out of business, but at least that's more in line with how an economy should work.
Reply With Quote
  #14  
Old 03 April 2013, 02:35 PM
ganzfeld's Avatar
ganzfeld ganzfeld is offline
 
Join Date: 05 September 2005
Location: Kyoto, Japan
Posts: 23,628
Default

I've had many jobs and I can't think of one that was made possible (much less created) by wealth. Mostly middle class people hired me. I never had a lot of money myself so they seemed fairly well-to-do at the time but, looking back with more understanding of those businesses, they were invariably making ends meet with perhaps a little more to invest in their businesses. (Then again, almost none of those businesses have been in the US. None of them required a very large capital investment. Two companies I've worked for did have investors but those investors were mostly people working for the company and their families.) I was hired twice for private jobs by very wealthy (I think) clients but most of the clients in the same business were middle class or lower.
Reply With Quote
  #15  
Old 03 April 2013, 03:25 PM
thorny locust's Avatar
thorny locust thorny locust is offline
 
Join Date: 27 April 2007
Location: Upstate NY
Posts: 9,523
Default

Quote:
Originally Posted by Richard W View Post
A lot of rich people get that way by buying, selling and merging existing businesses. Usually that decreases the number of jobs available compared with having lots of smaller independent businesses. One larger company can use economies of scale for "efficiency", which in this context usually means getting rid of jobs. There will be fewer independent managers and owners, and more of the money being funnelled upwards.
A very good point, Richard W.

Twenty-seven independent hardware stores? At least twenty-seven (probably more, as some are likely to be partnerships, family or otherwise) jobs as store owner, plus all the people who are hired by those businesses. Long-term employees often have some reasonable hope of eventually becoming store owners themselves.

A hardware department in a handful of branches of a big-box store? A batch of low-level positions, almost certainly totalling fewer than the total jobs supplied by the independent stores, including at most a few department manager jobs, with effectively no chance of advancing to own the company.
Reply With Quote
  #16  
Old 03 April 2013, 03:48 PM
GenYus234's Avatar
GenYus234 GenYus234 is offline
 
Join Date: 02 August 2005
Location: Mesa, AZ
Posts: 26,270
Default

And even if rich people were the sole (or major) job creators, it doesn't automatically follow that cutting the taxes of the rich would create more jobs. Jobs are created when there is both need and money for that job. Without the need, there is no new job.
Reply With Quote
  #17  
Old 03 April 2013, 05:10 PM
Richard W's Avatar
Richard W Richard W is offline
 
Join Date: 19 February 2000
Location: High Wycombe, UK
Posts: 26,295
Default

Quote:
Originally Posted by Steve View Post
And the Spirit Level doesn't really deal with the economy from a demand point of view. It's about how more equal societies are, overall, happier so that even the wealthy who fund the welfare state are better off. (Also I'd sort of thought that your last name was Wilkinson and wondered if you were related to the guy who wrote it. Well, now at least I know that you aren't him.)
No, definitely not me... I don't know nearly enough about economics to write a book on it! Presumably he manages to make much better and more well-informed points than I do (and wasn't drunk when he wrote the book, as I was when I wrote my first post above...!).
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On

Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
Girl talk Thing 1 SLC 462 15 August 2018 01:55 PM
Interpol order shouldn't create fear snopes Snopes Spotting 0 12 January 2010 05:39 PM
Small Businesses Create 2/3 of Jobs in US Simply Madeline Business 1 19 December 2008 12:29 PM
‘Nature’ wants to create buzz about bee crisis snopes Snopes Spotting 0 29 October 2007 05:22 AM
Send this e-mail to 50 people, and Steve Jobs will cure cancer snopes Snopes Spotting 0 03 May 2007 02:51 AM


All times are GMT. The time now is 01:55 PM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2018, vBulletin Solutions, Inc.