Of all the GOP spin and nonsense that they've managed to turn into conventional wisdom, nothing is more infuriating than the idea that CEOs, small business owners and pretty much the upper class in general are behind all job creation. Ezra highlighted part of yesterday's press briefing wherein a reporter just kept coming at Gibbs with one "question" after another that was straight from the GOP/Chamber of Commerce playbook:
Q On jobs, which is the big complaint up on Capitol Hill right now
from Republicans, that this plan is a job killer, I mean, the $787
billion plan was all about jobs more than anything else, and now you've
got a plan in place that -- how can you possibly tax people making over
$250,000 something like $667 billion over the next 10 years and not
have a downward effect on jobs?
MR. GIBBS: Well, Chip, how did it work in 1994 and 1995 and 1996 and 1997?
Q I guess their argument would be, imagine if they didn't have those -- those taxes, how much better it would have been?
MR. GIBBS: Isn't it interesting that there's always some little
slip? Again, you know -- again, I don't do this by happenstance. There
isn't a member of Congress, if they were to file a single taxpayer
form, that makes above $200,000 a year.
Q Well, Congress. There's a lot of millionaires up there.
MR. GIBBS: Well, that's true. But it's on their income. I mean, I
think it's interesting, as people listen to those complaining about
some aspects of the budget, I think it's just interesting to note -- I
think the President was pretty clear on Tuesday -- we're talking about
people that earn in excess of a quarter of a million dollars a year.
Q And a huge percentage of those people are small business owners.
MR. GIBBS: Some of them are, sure. Some of them are big business
owners. Some of them are home-run hitters in major league baseball.
Some of them run kickoffs back for a living. Some of them are the
President of the United States.
Q But a lot of them create jobs.
No they don't. They really don't. Consider, as an example, a company owned by a friend of mine. It's a web hosting company that should reach around $5 million in revenue this year even with the economic crisis. There's about 20 people employed by the business.
So that's 20 jobs created by my friend and his partner, right? Nope. They haven't created one job - both my friend and his partner were gainfully employed before going into business together. For the first couple years of the business, they did everything themselves. Long after they were tired of the early mornings and late nights, they still did it all themselves, until something very particular, something almost magical, really, happened.
They got more customers. And with more demand for their services came more money, which allowed my friend and his partner to hire a network engineer. This continued, letting them hire more engineers, some salespeople and operators to staff the Network Operations Center. The company is building its third datacenter now, so various contractors are getting work, and the air conditioners, UPSs, the huge diesel generators and other equipment require maintenance and repair, and the power company has already had to upgrade the transformer outside the current main datacenter because of the amount of electricity used to keep so much equipment running.
And while it is correct to say that my friend and his partner are responsible for all this economic activity, it is also completely correct, using the same standard, to declare that they aren't responsible for one bit of it. Their customers are the ones actually driving all of this. Without the customers, there's no new datacenter, no engineers, no sales, accounting or operations staff. There's no need for a larger transformer and emergency generator.
This new datacenter, which has local contractors in a bit of a tizzy trying to get the business, only became necessary, even possible, because the other datacenters got full. Without clear evidence of demand, no bank was going to loan money for more supply. Demand always precedes supply. Always. Even when someone comes up with a new product, the only way that product gets to the stage where it creates a business, or a share of an existing business, is when someone can demonstrate convincingly that there will be sufficient demand for it. The American marketplace is littered with failed products for which there wasn't sufficient demand.
There was a period of time in the late 1990s when rich people set about creating jobs - that is to say, using their money to allow people to skip the important steps of building a customer base before opening up multimillion dollar offices, complete with foosball tables and gourmet meals in the company cafeteria. I am speaking, of course, of the dot com boom and bust. Venture capitalists, drinking equally from the Kool-aid of Internet riches and their own myths of job creation, lost millions of dollars investing in virtual companies that had a catchy idea but no clue how to turn that idea into something that would generate profit. Pets.com, anyone?
Demand always precedes supply. Always. I'm proud of my friend and happy for him. He has a successful business, and it's having a positive impact on the economy around here, employing and/or contracting quite a few people in the area. But it's the customers, the companies with 50 servers, the little business with just one server, the website hosts with thousands of websites they manage on their boxes, all of these customers that are actually creating these jobs. If my friend and his partner had actualy set out to "create jobs" - if they had hired a bunch of engineers and operators back when all they had was their dinky first datacenter, they'd be out of business.
When this is applied to the American economy as a whole, it's clear that the millions of Americans who don't have $250,000+ in taxable income on their 1040 forms have created far more jobs than those who do. Both groups have their role, but if we were to tax the rich into oblivion, people would still need groceries and gas and clothes and oil changes and diapers and all the other little things that us little people spend our money on. And even if the Titans of Wall Street were to all disappear - a guy can dream - that demand would continue to create job after job after job. Hell, taking the game-players out of the equation would probably make the system more efficient.
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