Henry Bloget, the discraced internet analyst for Merill Lynch, has a great piece about where jobs come from. Here. His premise is that rich people do not create jobs, instead it is middle class spending and business response to that spending that really creates jobs.
A CEO who make 100 times what his workers make does not consume 100 times more. Instead they save the money. Instead, they consume only 3-5 times more than the average middle income family or if they are greedy 10-15 times more. Let's be honest the rich only need one yacht, 3 homes and 6 cars not 100 Hyundai's, 40 homes, 50 apartments and ten trailers. The middle class puts much more money back in the economy than the rich ever do.
Economists will argue the money eventually end up in the system as investments but then we have an over supply of investment capital and a shortage of consumption. However the investment capital is "parked" while a shortage of demand feeds the recession.
This central fact of supporting middle class spending has escaped trickle down, right wing economists for the last 30 years. It took Occupy Wall Street to awaken us to this simple fact. Inequality matters. It matters a lot. Economic theory is behind the curve again. Our models are chasing, not leading, the current reality.
New economic models, where broad happiness is the goal, show us that successful societies seek a balance of incomes and consumption across classes. Income equality and social justice lead to societies with greater happiness, civic participation, equality and happiness. The best societies, in our opinion, have an equal income distributions.
So how do we get there. We must support policies that reduce income inequality like a $10 minimum wage, unions, and progressive taxation. We must support government's responsibility to promote income equality that makes us all better off. But government alone is not he answer. We also have a responsibility to be smarter consumers; to support businesses that pay a decent wage and hire local employees; that innovate; and support social justice. We must demand better of government and ourselves.
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