You can't get very far in watching the presidential primaries without hearing this line: "we've got to help the job creators."
Well, of course. We all need jobs. Just look at the unemployment numbers, the grim projections, or the people who aren't even counted as unemployed any more because they've given up. Who wouldn't want to help the job creators?
But the way the debate is shaping up, "job creators" translates as "rich people." We act as though income tax rates are the only factor in whether people get hired or not. And that's not the right way to think about the jobs crisis.
The fact is, we're all job creators: the richest and the poorest of us. It's just a matter of degree.
The struggling worker buying bread at the bodega, the middle-class couple who hire a baby sitter for the evening so they can go out to dinner and a movie, and the banker bringing another gardener to shape interesting topiary are all putting money into the economy. That's how the bodega clerk, the baby sitter and the gardener get their jobs. If the wealthier person hires a gardener, a housekeeper and private tutors for her children, then yes, she's putting more money into the economy than the person at the bodega.
If it comes to that, we're all job destroyers, too. If you've switched from DVD rentals to streaming video, or from CDs to an iPod, you've helped put a video or music store clerk out of work. We're all a part of "creative destruction." The corporate executive who lays off hundreds or thousands of workers has a bigger share of that, as well.
But the real engine of job creation isn't consumption; it's creativity.
It's new businesses, new products, new ideas that really drive job creation. A study by the Ewing Marion Kauffman Foundation reportedthat two-thirds of new private sector jobs are coming from businesses that are between one and five years old. Federal statistics show there are 3.7 million firms with 10 employees or less. That's a major reason why economists talk about the value of small business to the economy. New businesses start out as small businesses. If they've really got a good idea, good luck and good leadership, they grow into big businesses.
This is where not all rich people are created equal, because they're not all creating anything. Bill Gates and Kim Kardashian both create jobs by spending their money, but Bill Gates isn't more valuable to the economy just because he spends more with quiet good taste. He's more valuable because he built Microsoft, a company that does billions in business, employs thousands of people, and helps millions more work more effectively.
If we're talking about the rich as job creators, then we have to acknowledge that not every rich person is creative. Even the Kardashians are at the upper end of the creativity scale; after all, they do have a production company and assorted business ventures. But simply consuming more and spending more shouldn't earn you a job-creation medal. The owners of the new restaurant on the corner or the startup in the downtown loft may be doing as much or more for the economy than a wealthy person who's just a consumer of luxury goods. They may even be doing more than the CEO of an established company, if their business is growing and his isn't.
If everybody is a job creator, then almost any economic policy that encourages spending will create some jobs, whether it targets the rich, poor or the middle class.
Not everyone is an innovator, however. From the personal computer to the single-handled faucet, it's innovation that pays off big when it come to jobs. And innovators don't always start off rich. To assume that rich people are creating products, opening markets or even building on what they have simply because they're rich is laughable -- and dangerous.
The challenge for job creation is to craft policies that encourage the people who will take that encouragement and run with it. The debate we should be having is not where taxes should be high or low, or whether Wall Street is good or bad, but how do we craft tax policies and credit markets that reward those who are striving to come up with something new -- and not those who are resting on someone else's laurels.
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