"A fast nickel is better than a slow dime"

I recently saw a short 5-minute video presentation by Nick Hanauer, a mega-millionaire capitalist.  He had an interesting perspective that really got me to thinking.  You can see it here if you're interested.  His position is that the rich will benefit more in the long run if we raise taxes on them now and in effect subsidize the middle class.  Huh?


He disputes the idea that raising taxes on the rich will kill job creation.  He says entrepreneurs do create a few new jobs initially, but unless the middle class has enough disposable income to buy what the new companies are selling, the new businesses will stagnate or even fail.  Only when a company has more customers than it can comfortably serve will it expand and hire and thrive.  Why would a company hire new people unless they had enough customers to keep them busy?  The 1% can't buy enough to compensate for the millions of unemployed/underemployed who can't buy much of anything.  It's a simple numbers game.


Then the next day I read a news article that said the Big Three automakers are booming, running their factories at near 100% capacity, and are adding more shifts and hiring new people, just like Mr. Hanauer suggested they would.  I doubt the 1% are buying very many Chevys, Fords, or Chryslers.  (They're more the Mercedes / Lexus / BMW type.)  This is all due to middle class demand.


The middle class and only the middle class have the numbers to be able to consume in the quantities necessary to stimulate the economy and create jobs.  And when the companies they own thrive and become hugely profitable, the 1% will benefit handsomely.  Give up a little today (higher taxes) to get a lot more tomorrow (higher profits).  It's called "priming the pump."


It's just like the business advice my dad gave me decades ago:  "A fast nickel is better than a slow dime."  Think about it.


S


(For the record, I'm a moderate Independent, distrustful of both political parties.)