Speaking of Nick Hanauer…
From a PBS interview:
(Warning: this might deeply offend some of you objectivist heroic beings!)
And in fact, in 1776, Adam Smith wrote that the more people who participate in an economy worldwide, the more people will specialize, the more people will come up with new technology, better ways of doing things and we’ll all be better off.
And indeed that’s the case. Most people believe, mistakenly, that wealth in a human society has something to do with money, but that’s not true. Money is simply a medium of exchange. Prosperity in a human society is the accumulation of solutions to human problems that we create for ourselves.
The difference between a poor society and a wealthy one is largely the difference in the number of solutions to human problems we have available to us. And it is simply a fact that the more people you have trying to solve human problems, the more problems you are likely to solve. That’s why an inclusive economy is always more prosperous than an exclusive economy.
Capitalism really has nothing to do with supply and demand. That’s just a mistaken idea. Capitalism works by being essentially an evolutionary solution-finding algorithm. The genius of capitalism is that it both permits and rewards people for solving other people’s problems.
But the problem is we have structured our economy in this sort of death spirally way, where huge profitable organizations like Wal-Mart pay poverty wages to a million workers, and then taxpayers make up the difference in social services programs like food stamps and Medicaid and rent assistance, and so on and so forth. It’s as morally repugnant as it is economically inefficient.
It’s a fact that Wal-Mart earned $27 billion in profit last year. They could afford to pay their bottom million workers $10,000 more a year, raise all of those people out of poverty, save tax payers billions of dollars, and still earn $17 billion in profit, right.
It’s simply nuts that we have allowed this to happen. And the only way you can change things is to raise the minimum wage. Certainly the people that run Wal-Mart will not do this on their own.
The idea that businesses will go out of business if they pay workers more is just not true, even though I understand the sort of visceral fear that some of them feel about this change.
But you’re talking as if it’s self-evident that this is a stupid system. But these rich people, these are not stupid people, they are your friends. Why don’t they see it the same way you do?
That’s a terrific question. Some of them do, to be clear. And my sense is that more and more wealthy people are beginning to see the economy in this different way, and they recognize that we have taken a bunch of these terrible ideas way too far, and that eventually it’s going to be bad for everybody. Of course, in a group of 100 people, there will be some people who do not care about other people, and simply are aimed at maximizing their near-term self-interest at the expense of others.
But the truth is, and I think this is a very important point, you can’t change a society with the kindness of strangers. It takes more than a few do-gooders to create a society that systemically benefits everybody.
Highway signs, speed limit signs are not suggestions – they are rules. If they were suggestions, it would be much more dangerous to drive, and we need to have essentially the same kind of thing in our labor markets to make sure that the most sociopathic employers are not allowed to lead a race to the bottom, that we push up the bottom in a way that benefits everybody.
Why Rich People Balk at Changing the System
But if it’s so clear to you that this is dysfunctional, and will hurt everybody in the end, why don’t more rich smart people agree with you?
The facts are that this change threatens both the pocket books, but more particularly, the status of rich people. One of the most interesting things I’ve learned about litigating these issues is how emotional people can get around seeing themselves, for instance, as job creators.
If you are a job creator, you’re very much at the center of the economic universe and everything orbits around you. And if you’re a job creator, a 15 percent tax rate on capital gains, a 15 percent tax rate on carried interest – all these things are the righteous instantiations of sensible economics. But if the middle class is the true job creator in the capitalist economy, all of those advantages and all of that status are essentially a con job.
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