One of the major shibboleths in the contemporary Republican / Right Wing theology is the myth of the Job Creator. He is, we're told, all wonderful, all powerful, yet at the same time easily offended. He may decline to do his appointed and unique task of creating jobs for the rest of us mere mortals to toil away in, unless he is constantly placated, fed, coddloed, given special breaks and incentives to do his work. He is easily offended by anything that might bother his delicate sensiobility, and thus dissuaded from his labors. We must giive him anything he desires lest he not create jobs. In short, he holds power of life, death, and regular pay (however meagre) over our society, and we must bow to his wishes or starve.
(I'll ignore the offensive feudalistic implications of this paradigm here - whole diaries could be written on that, and the mindset it represents, alone - and focus on the economic aspects.)
This myth is the ultimate distillation of the trickle-down economic theory that has gripped the country since the days of Ronald Reagan and Arthur Laffer. Give the wealthy, and the wealthy corporations, more income (and power - the two are of course inextricably linked), and they will act to create jobs and wealth that will inevitably trickle down to the average Joe, making his life happier. That belief is such entrenched dogma in current Republican circles that even the least faltering in shouting it to the skies at every possible opportunity makes one essentially unelectable (in a Republican primary, at least).
It's also exactly what I initially termed it - a myth, unsupported by any economic theory or (far more importantly) any historical experience. The history of the United States since 1980 is the long dreary enacting of the failure of trickle down theory when put into practice. Yet the concept retains currency, and partially because it's easily precis'ed. It's snappy, memorable, and graphic. Progressive economics (that is to say, almost all rational economic theory and history), are by contrast muddled and hard to explain or grasp. The Right relies on that conplexity to reduce progressive economics to a caricature of pointy headed professors and bureaucrats diddling around with other people's money without a care for the plight of the average American, interested only in their own aggrandizement.
We need to do better. And here I'll modestly propose an alternative vision.
The first thing to ask, when one considers the supposedly all-powerful Job Creator, is: what makes him create a job in the first place? (I'll use masculine pronouns here, with apologies, for brevity) After all, he already has cash and other assets sitting out there earning some return from some means, whether it's bank interest, stock dividends or appreciation, and so on. Why move it into anything to create a job to begin with? The answer, of course, is greed (not in a pejorative sense, but signifying acting in one's own rational self interest). When and if he can get a better return doing something other than sitting on his cash, he'll invest in something that might create jobs. That threshhold issue is one reason that the accelerating rate of wealth accumulation in the hands of a few over the past generation hasn't resulted in an explosion of jobs, as the Job Creator theory in its purest form would predict - investment in job creating activities must offer returns above those of pasive invesdtment (along with viggorish to account for risk) to make the investment attractive.
Next, one has to ask when an opportunity will present a suffieicnt potential return to overmatch that built in inertia. And that occurs when there's a sufficient demand for the goods or services that the job to be created will provide. No one will build a factory to make products that can't be sold (for long, anyway - those quadrophonic speakers are still gathering dust in some audiiophiles' garages from the 1970s). Even innovative products such as the IPad won't last long if there's no consumer deemand for them (again see those quadrophonic speakers). Consumer demand thus will dictate if a Job Creator wants to invest in activities that will create employment oppostunities.
This is a truism of modern economic understanding, but its significance is often overlooked. And it's key to a proper analysis of our economic situation and how to fix it. Job Creators don't drive the employment market. They are reactive participants in a cycle that's rather driven by consumer demand. No supposed Job Creator rolls out of his Scrooge McDuck-style bed of stocks and specie in the morning and says, "I think i'll build a factory and create jobs today." He makes that decision because demand exists, or at least can be fairly predicted, for what that factory will produce. Thus, the Job Creator doesn't create jobs - he reacts to market demand. He's just the passenger on the train. That demand is the source of job creation energy.
So, what creates or drives demand? And here we know the answer readily: consumers with buying power. The modern Western society - in the US, in Europe, increasingly in Asia - is founded on consumer spending by the mass of the populace. We monitor it constantly, we worry about it, we at least give lip serrvice to encouraging it (George W. Bush's vapid exhortation to defeat terrorism by going out and shopping being a particularly embarrassing example). This consumerism depends on that populace having sufficient disposible income, and confidence that they're not about to lose everything, to allow them to spend on the various products. Demand, like jobs, thus arises not from the benificence of the ubermensch Job Creator's invisible hand, but by an upswell in mass spending habits.
The real nature of modern economic activity, therefore, is the polar opposite of that which the Job Creator myth posits. The wealthy (individual or rcorporate) don't create jobs, mass demand call them forth to meets its appetites. Jobs - and wealth, and economic growth - don't trickle down. They bubble up. We create the jobs, not the Job Creators of Republican lore.
Recognizing this bubble-up nature of economic growth has profound implications for public policy. By removing the Job Creator from his exalted position at the center of the economic universe, the argument for continuing to bestow favors and blandishments on him in the hope that he'll create jobs vanishes. The favors, if any, to be given should instead go to the mass public, to encourage and empower them to spend. That, in turn, requires that the public be prosperous, and increasingly so. And that in turn argues for policies and 'laws that favor increasing incomes, social safety nets, and other factors that will allow people as a whole to continue to spend on good and services. In this light, tax breaks for the Job Creator become not just misplaced but definitively counterproductive to the extent that they deny or divert money from the mass of the populace.
This view of economic activity is borne out by the last century of economic history as well. The Great Depression wasn't ended by government austerity or handouts to corporations to get them to hire people (indeed, the long delay in ending that catastrophe can be directly traced to FDR's retrenchment and adoption of an austerity policy during his second term). It was ended by putting the mass of the population to work - first on government jobs such as WPA and other infrastructure projects, then in the war effort (in economic terms, World War II was the most gargantuan stimulus program ever imagined, and look at the results), then in the mass consumer goods market that we encouraged by a variety of public incentives after the war's end. That market, fueled by dramatically improved disposible incomes generated through strong unionization of major industries that yielded higher wages and benefits, created a boom in middle class upward mobility through the middle of the 20th century the likes of which no society in human history had ever experienced. That explosion in middle and lower class income was coupled with historically high marginal tax rates on the wealthiest individuals and corporations, allowing government not only to construct a massive national defense apparatus but to invest in unprecedented infrastructure work such as the Interstate highway system, scientific research, and public universities.
The 1970s ended that boom. The market, our economic base, and the world, were all changing. The first oil cartel extortions battered administrations of both parties. But we took those changes, and the dislocations that resulted, not as signs that we needed to change our manufacturing base and adapt to a world of increasingly rapid economic change, but as a sign that somehow the systems that had led us to our unique prosperity - strong unionization, high marginal tax rates allowing for public investment, and a devotion to enhancing income and upward mobility for the masses - were themselves to blame, and deficient. That's when the trickle down theory emerged, led by Laffer and Reagan in their respective realms of economic theory and politics. Their triumph ushered in the past generation, in which middle class income and upward mobility has stagnated or even retreated, fueled by the marginalization of the labor movement, the outsourcing of jobs, and a devotion to the idea that aggregating wealth in the hands of a relative few would eventually - someday, if we were just patient enough - help out everyone. That idea was patently false to begin with, and we now have the bitter history to prove it.
The legacy of trickle down economics is one of increasing oligarchy, stagnation in income and opportunity for the mass of the population, and a nihilistic rejection of the very notion of our collective ability to help ourselves and our neighbors. The opportunity of a renewed devotion to Bubble Up economics is not just the re-emphasis on the need to strengthen the vast middle class, but a recognition that we as a people are in charge of our own future - we don't owe obeisance to the Job Creator any more than we do to the high priests of finance or corporate greed. We, as a people, are in control - or we can be, if we have the nerve to take back the helm.
Bubble-Up Economics. I think that's a damn compelling narrative, and one that puts the trickle down / Job Creator paradigm under some pretty uncomfortable heat. This is hastily written, so forgive its redundancies, typos, and awkward locutions, but I'd appreciate any thoughts.