Conservative tax/employment doctrine goes like this: the more money you give to the top income earners the more jobs will be created. Besides the fact that from 2001 to 2011 we have seen the most wealth going to the top 2% in the last century while, at the same time, jobs have been destroyed at a rate not too far different from that during the Great Depression, there is another reason that this policy does not reflect reality.
The 2% are not those who determine employment numbers. These are stockholders and bond holders, often times two, three or four generations removed from the founding of the corporations from which they now gain passive income. With rare exceptions are they in the position to influence employment. Those decisions are made far down the corporate pyramid of influence. And even then, they are not in the positions to just arbitrarily go on a hiring binge. Why?
The Human Relations Department has to answer to the CEO for any increase in employment. And the question here is a simple one: How much net additional revenue will a new employee bring to the company? Hiring does not automatically generate more revenue. Nobody hires someone just to add a number to the employment column. Long before hiring additional person is hired these questions would be asked: (1) Can what they do be done cheaper by existing employees with enhanced technology (more and better computers, etc.) and (2) Is our low revenues due to a lack of manpower or a lessening of demand for what we sell across the economy as a whole?
Conservatives count on everyone ignoring the overall condition of the economy while demanding that we be cutting taxes at a time when the national debt is growing, while, at the very same time, assuming there is some immutable law compelling the 2% to be hiring at a time when the demand for more employees is at the lowest. In what world is this cogent policy? None that I know of.
When we are talking about the 2% income earners, we are not talking about corporations where the lion shares of all long-term, high-paying jobs are created. [Mrs. Got-Rocks hiring an additional gardener or mom and pop hiring holiday part-timers will not "put America back to work" in any significant way.] We are talking about people who get their income from investments. They have a vested interest is cutting HR costs, not adding to them. As a stockholder in a corporation, how am I advantaged by hiring additional employees and how would I exert my influence to achieve that goal were I of the mind to do so? Just what CEO would take kindly to a stockholder telling him or her how to run the company? And what CEO would return the call of a stockholder who, most likely, had zero experience running a multi-billion dollar international corporation?
So where did this idea come from? It is the product of pure irrational thinking...the conflation of decisions made by mom and pot retail stores as to how many people they should hire during the holiday season... and how to justify, in the taxpayer’s eyes, providing the richest of the rich with access to more luxury while depriving members of the other 98% with the basic necessities of life. It is a doctrine having nothing to do with jobs and everything to do with attempting to make a case for enriching the patrons of most of a significant number of members of Congress. It is highly distilled insanity aimed to con the 98% into advocating lessening their share of the income pie.
So where do we go if this idea is bogus? We go to what Paul Krugman and many other rational economics have been telling us in so many words: (1) Private sector employment is driven by a number of factors but ultimately consumer demand. (2) The surest way to increase consumer demand, when the private sector is in recession, is to increase the disposable income of the other 98% of income-earners through the purchase of goods and services by the public sector. (3) The greatest bang for our public sector bucks spend – even if they have to be borrowed – is to purchase things that are domestically produced and delivered by American citizens. (4) An economy can no more be stimulated to grow through austerity than milk production can be increased by cutting back on cow feed.