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Daily Connect: Interdependent Economics: Middle Class Based Job Growth
Submitted by Patrick Groneman on Wed, 2/1/2012, 8:30am
In a recent article for the Huffington Post, economist Jared Bernstein argues against "trickle-down" economics. He gives many examples of the ineffectiveness of the philosophy, the most relevant to the topic of Interdependence being the "feedback loop" necessary between producers and consumers to sustain job growth.
To articulate the "feedback loop" he cites and article by venture capitalist Nick Henauer:
"I've never been a "job creator." I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That's why I can say with confidence that rich people don't create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses [my emphasis]. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be."
This, to me, is a great example of thinking about our economic and political systems with more Interdependent awareness. A business owner's financial success is in direct relationship to the financial well-being of a consumer who purchases her products, so naturally, we should support job growth by supporting both the producer and the consumer...maybe we all deserve tax cuts? Or tax increase?
Here's an interesting graph from the Center for American Progress, which compares average employment growth to the top marginal income tax rates.
What do you think? Does this "feedback loop" view of economics have anything going for it? Does it represent your values as either a consumer or business owner?
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by Eman Nep