Submitted by: Mike Spindell, guest blogger
I am a regular subscriber to the website WhoWhatWhy written by investigative journalist Russ Baker. Recently he ran a response by one of his readers, Dave Parker, to a video Russ posted of Nick Hanuer, a billionaire venture capitalist who gave a talk at TED, which is an acronym for the non-profit, Technology, Entertainment and Design, TED holds conferences around the world on business/societal issues that relate to its theme. In his talk Mr. Hanuer dispelled the idea that the Rich create wealth and instead said it was really the middle-classes that drove the economy. He disparaged the idea that it is the entrepreneurs who are the “job creators”. Although the talk was well received by the conference attendees, TED curiously chose not to publicize it as it usually does with other such talks. Perhaps their decision was because Mr. Hanuer’s thesis goes against the current widely accepted mythology regarding job creation and entrepreneurship. Here is a video of his talk:
In his comment on this video, Dave Parker used the writings of Joseph Campbell. Joseph Campbell was:
“an American mythologist, writer and lecturer, best known for his work in comparative mythology and comparative religion. His work is vast, covering many aspects of the human experience.”
My reading Dave’s article was the type of moment where you can imagine me slapping my head and exclaiming: “Damn, why didn’t I think of that”. Indeed, I’ve read all of Campbell’s books and seen all of his famed PBS series of interviews, done with Bill Moyers. What follows is my jumping off from Mr. Parker’s excellent comments and any credit for what I’m writing here goes to him for his perception. In applying Campbell to Mr. Hanuer’s comments, Dave solidified a concept for me that’s been playing in my head for years about the 1%’s need to increase the disparity between themselves and everyone else . The Rich are trying to create a new kind of feudalism where Lordships are won not on battlefields, but in corporate boardrooms. The rest of us need to be impoverished because without serfs to worship them, having everything ultimately becomes boring. Some of the 1% no doubt are less ego-driven and have empathy for those not on their level, but even they are beneficiaries of a mythology in creation. I believe that this mythology is the result of a campaign waged since the supporters of Barry Goldwater went down to an inglorious defeat.
Joseph Campbell spent his life studying and teaching about mythology. This is a word that usually evokes images of the Hindu, Greek, Roman and Norse Gods. In a way, for some, mythology has become conflated with paganism. To Christians, Muslims and Jews of fundamentalist beliefs mythology is the other guys religion, when in fact it is also true of their own. However, Campbell did not stop with religion as mythology, he saw it as a driving force shaping human behavior and thus also studied the effects of cultural and political beliefs on human societies. Below is his sense of the role mythology plays in shaping ourselves and our societies via what Campbell calls the “Four Functions of Myth” taken from Campbell’s: “Pathways to Bliss (Novato, CA: New World Library), pp 6-10.”, I will discuss how these functions play out today to shape our collective views of the world.
One salient piece of Campbell’s history should be looked at before showing how these elements of mythological creation have been used in America, to lay the groundwork for a Corporate Feudalism, that will leave enthrone 1% as our Nobility. Dave Parker gives a side of Campbell that I was not aware of and I feel explains much:
“Campbell himself lectured for the State Department’s Foreign Service Institute for Decades, beginning 1956.……………That tells me that ever since the greed heads and warmongers at State and elsewhere have been steeped in a perverse reading of Campbell’s work. They read it for its utilitarian value in pursuing “National Security”. And the “successes” of the Feds are envied and emulated in the world of corporate propagandizing”
My suspicions are that we are being led via popular culture and the redefinition of celebrity, into a mindset that opens the door for Corporate Feudalism and indeed shapes the attitudes of most people. These are Campbell’s Four Functions of Mythology (.pdf):
1. …the first function of mythology [is] to evoke in the individual a sense of grateful, affirmative awe before the monstrous mystery that is existence
2. The second function of mythology is to present an image of the cosmos, an image of the universe round about, that will maintain and elicit this experience of awe. [or] …to present an image of the cosmos that will maintain your sense of mystical awe and explain everything that you come into contact with in the universe around you.
3. The third function of a mythological order is to validate and maintain a certain sociological system: a shared set of rights and wrongs, proprieties or improprieties, on which your particular social unit depends for its existence.
4. …the fourth function of myth is psychological. That myth must carry the individual through the stages of his life, from birth through maturity through senility to death. The mythology must do so in accords with the social order of his group, the cosmos as understood by his group”
As sentient beings, self-involved, the fear of our inevitable demise is primary to our existence. This gives rise in us to yearnings for meaning in our lives and purpose to our lives. Most of us need the comfort that when our inevitable end comes, we will continue to exist in some form. Beyond religion though, we are essentially social beings, who have learned the benefit of co-existence with other members of our species. In shaping our society it is essential that we have some over-arching concept that something exists around us to keep us safe from the terrors that are the legacy of our predatory past. We develop words like Republic, Democracy, Islamism, Libertarianism, Fascism and others of that ilk that provide individuals with a sense of something larger than themselves that provide protection for us and give meaning to our lives. In tandem to those words connoting societal structure are conflated words relating to the economic systems we live under such as Capitalism, Liberalism, Socialism, Communism etc. In truth all of these words meanings varies with each individuals perception of their meanings.
Most Americans have been inculcated with a set of mythological buzzwords if you will, that connote our Country’s notion of “exceptionalism“. We have been taught that America is a “Republican Democracy” thriving under a “Capitalist” economic system that provides us “Freedom”. We use symbols such as our Flag, our Anthem, and our Constitution to invoke the “grateful, affirmative awe” that Campbell describes. We are proud to be Americans and most importantly we feel protected by our mythology.
These mythological symbols have been translated by our government beginning in WWII and throughout the “Cold War” into awe inspiring emotions within us. Even as I try maintain a skeptical distance between myself and the myth of America’s Dream, I am also emotionally stirred by the evocation of this mythology, that approaches the “grateful awe” of which Campbell speaks. My sense of that awe is limned by my understanding that America’s Constitution nowhere mentions Capitalism, or even sets up a national economic system, so when I see this economic theory conflated with the notion of Freedom my hackles rise. I imagine this is not true for the majority of Americans and this has led to the widespread belief in the “American Dream” and our viewpoint that even the least among us can achieve untold success. People seem to not want to vote in their own self interest. It is this notion of the “American Dream” that has allowed taxation to become inequitable to the point where the rich pay a lesser percentage of their income than the rest of the people, yet many of those shouldering this burden are lured by the siren call of “no more taxes” for fear that they will be burdened once their own success is achieved.
This matches well with another piece of the American mythological order in that there is the widespread concept of a “free market” being the apex of economic freedom. Thus all economic problems can be solved by ensuring that the “free market” is allowed to reign undisturbed by selfish manipulations of the government. The argument about whether there even is such a thing as a “free market” I’ll leave for another day. It is incontrovertible though, that this is a belief of a large majority of Americans and certainly has fared well in the political context. In the notion though of a “free market” comes a further notion that those who partake in the market’s freedom, indeed the movers and shakers of the market itself, are the “real heroes” of the “American Dream”. The Entrepreneur is held up as the most meritorious among us, because it is the Entrepreneur whose efforts create all of the blessings we share in common. The definition of entrepreneur of course is quite stretchable and leads from people of modest birth like Buffett/Gates, to those whose fortunes have been inherited like the Koch Brothers/Walton’s/Trump’s.
If our society is driven by these entrepreneurs then of course their status is rightfully at the top of our particular American food chain. They become sources to be venerated, copied, modeled after and of course envied. I believe they are well aware of this, luxuriate in their Alpha positions and assume the trappings suited to their status. Interestingly, many of the scions of “Old Wealth” in this country eschew the immodest lifestyle, thinking it gauche and nouveau riche. While their living standard reflects the elite into which they were born, they don’t feel the need to flaunt it like those parveneau’s such as Trump. For the masses of us we understand on some level that the Mellon’s for instance, are better than we, even though they don’t comport themselves in a way that draws publicity. Our role models for wealth come from those such as Donald Trump, who beyond his money and/or accomplishment, branded himself as the epitome of wealth and living luxuriously, even though his example is one of gaudy ostentation in the worst of taste. He is the entrepreneur as version of the Movie Star, which has been so confused with success and the “American Dream” that one became President and another the Governor of California.
Awe can be described as “a feeling of reverential respect mixed with fear or wonder”. This in truth is the way many of us view the elite of this country. This has been reinforced time and again by both media and by those in Academia who have functioned as their minions. It has also been the thrust of a massive propaganda campaign to disparage “liberalism” and turn the country towards what was redefined as a “conservative”viewpoint. I believe that viewpoint is less about political philosophy and more about solidifying the hold upon this country of a newly defined aristocracy. We are in “awe” of these our bettors, just as much as the medieval peasantry was in awe of the nobility of their day. Back then the gossip about the local Dukes latest mistress was as interesting and as titillating as Tom Cruise’s divorce, or The Kardashian’s TV show.
In medieval times entertainers were considered to be much less reputable, even while sharing relatively wide fame. Shakespeare was considered disreputable despite his fame in his day. Today entertainers are lionized as members of the elite which is mainly to conflate their fame with that of the Corporate/Inherited Elite, thus borrowing their glamour for the latter. In our society today the doings of the super-rich and other celebrities has become mainstream news. HGTV, for instance, has three programs dedicated to lovingly show the housing of the rich in New York, LA and London. The edifice homes, some costing as much as $50 million are displayed to us peasants for what reasons exactly, if not to inspire us with awe at the lives of our “betters“? Can we all remember the adulation poured out on the passing of Steve Jobs? He certainly was a man who made many contributions, but from his deification one would think he was directly transported to Valhalla. There is deification of our Armed Forces as the heroic exemplars of all that is good and true in America, yet are true gratitude is such that 50% of their families are on Food Stamps. Remember the hushed tones in which the news media portrayed General Petreus? That polls have shown many Americans to believe Ronald Reagan was our “Greatest President” is yet another example of the conflation of celebrity with supposed greatness. Neither Petreus, nor Reagan were either super-rich or super-competent, but they were treated with the deference of nobility and that is the point. We hold all these symbols in awe and the underlying message is one of gratitude to them for showing us what to aspire to and by leading us benighted fools through example. Jesus is of course the ultimate myth since in the opinion of many his decisions control our lives for eternity. “What would Jesus do” is a question asked by multitudes and many have been led to believe that if returned today he would be our ultimate entrepreneur.
This returns us full circle to Mr. Hanuer dispelling the idea that the “rich” create wealth. They are not in the end the “job creators” that Mr. Romney and conservative “wisdom” would have us believe. Yet I must acknowledge that a sizable number of Americans would take exception to that assertion. I think too that the “creator” part of that meme is one fraught with connotation. Just as religion deems that God created the world, isn’t there a strong inference with the term “job creator” that would lead one to feel that the Entrepreneur created America. Doesn’t the mythological creature in that reference stand above the Founding Fathers in our current mythological reference of America being the most exceptional country in history? I believe we are blinded by this American mythology to such an extent that the problems we face as a society will not be fully recognized until it is too late and we will collapse in the shattering realization that so many of our life perceptions are mythological in origin.
Adolph Hitler took a shattered country with a hyper-inflated, impoverished economy and through the brilliance of a master of mythology, Joseph Goebbels, created a world power with the potential for empire. NAZI Germany’s destruction though came about chiefly because the mythologists began to believe, along with those they had gulled, that their mythology was absolute truth and that they the “Master Race“ would prevail against all odds. Fresh from the incredible triumph of World War II and with the evidence of the most impressive military/industrial buildup in history, our politicians and public became convinced of the “exceptional nature” of the United States. We discovered another implacable foe to oppose and fought a new kind of war on a global basis. That having ended with the USSR’s collapse the country’s elite searched for new “enemies” with which to keep our military occupied and our defense industry rich. Perhaps the culmination of the idea of our country’s exceptional nature came with the writing of the “Project For The New American Century” a design to make the United States into an Empire in the Twenty-First Century. The two main guiding architects of that manifesto were Dick Cheney and Donald Rumsfield, who also were the architects of the two wars in which we are still enmeshed.
Joseph Campbell correctly believed that mythology serves as a glue to maintain human beings in the close relationship of society, to give meaning to our lives and to give us inspiration to progress and achieve heretofore unthought-of accomplishments. Mythology though can also be the undoing of a society, community, ethnicity and religion. I believe that in the case of our country I see the signs of our common mythology seeding the possibility of disaster. For the dream captured, however imperfectly, in our Constitution, to culminate in a feudal system dominated by Corporatism, would seem to me tragic. My hope is that this piece will initiate some creative thought in the reader, just as Dave Parker’s comments did with me and I’m interested in how others view this concept of mythology recreating the Feudal System.
Submitted by: Mike Spindell, guest blogger
@Bron: . These projects are funded by stocks
Hardly ever, as my example above proves.
Savings/investing is what spurs growth, not spending.
That is non-sensical. Sterile investing spurs nothing at all in the economy, and non-sterile investing necessarily buys products and services from others, that is spending. Spending on products and services employs people and gives them money in wages that they then spend on food, shelter, transportation and entertainment.
Saving money does nothing to spur the economy; if I stuff my mattress with bills it is sterile, too, until I spend it.
Bonds and loans spur the economy if they are SPENT in the economy to accomplish something.
As for government spending, that can be sterile or not. If their spending is just money that ends up in a wealthy man’s stock portfolio, it was sterile spending. If they spend money on infrastructure, that employs people, or education, or research that the public can then use, that is non-sterile, the purchase of labor and materials and products boosts the economy.
(Whether the government should be engaged in such activities is a different philosophical question; so is the discussion of how much people should save or borrow; this comment is just about the obvious fact that spending money on products and services is obviously better for the economy than saving that money).
If Mike S was running for office, this clip from “The Newsroom” series on HBO just might apply. Guess which one is Mike:
http://youtu.be/FKklog0T9a4
Dredd,
If you’re comparing me to Will McCavoy in the clip, I’m flattered but I wouldn’t have needed the cue card. If you’re not then what have I ever done to you? 🙂
Blouise:
“You, Gene, and Tony C. should seriously consider collaborating on a book.”
I heartily concur, may I offer the following for a possible working title:
“Sophistical Reasoning”
@Bron: Although buying a stock or currency is technically an “investment,” in reality it is indistinguishable from a “wager.”
The problem is that these investments are sterile, it does absolutely nothing for the economy for me to buy IBM stock from you without a broker. It doesn’t help or hurt IBM operations, they do not get a dime of the transaction from me or from you (in fact it can legally obligate IBM to do a little uncompensated bookkeeping, in order to redirect the dividend check).
If instead of buying your IBM stock I put my money into developing an invention to expand my business, I employ programmers, electrical engineers, machinists, I buy equipment that needs operators, I hire assembly techs, and eventually I sell a product that meets a need and makes other people more money, or saves them time, or gives them mobility they were previously denied.
Bonds are a different animal that must be taken on a case by case basis. Bonds are often floated for expansion or upgrades. In those cases the bond is not a sterile investment, it is being spent on products and services and will improve the economy (or an economy).
That is another route for tax encouragement; reducing income taxes on bond interest income when the funds are obligated to domestic use.
Otteray Scribe:
Bonds are used to fund public works projects. Stocks are used to fund a companies growth. Money in circulation is not what creates jobs. Investment creates jobs, growth creates jobs.
You have to have something to build to keep carpenters, welders, masons and electricians busy. These projects are funded by stocks and bonds.
Banks use savings accounts to loan money to people to buy houses which can put tradesmen to work if they are new houses. Savings/investing is what spurs growth, not spending.
Frederic Bastiat has a good example using 2 brothers, Mondor and Aristus, one is a spender and one is a good steward of his money. Bastiat shows how the brother who is the spender does nothing for the economy in the long term.
It is called Frugality and Luxury.
http://bastiat.org/en/twisatwins.html#frugality_luxury
Mike S.,
“As to Marie Antoinette the story is probably apocryphal, but the story is a good metaphor for what caused the French Revolution” … and it fits so well within my particular use of propaganda. However, honor now demands that every time I use the phrase “Let them eat cake” I must also use the word, apocryphal. (deep sigh of acceptance and regret)
In response to your announced intentions I am going to express an opinion … I can’t stand reality shows and never watch them. Not quite never … I watched the first two seasons of Survivor and I positively loved an HBO show called “Family Bonds”.
At any rate … I won’t get any of your explanations or examples because I’m completely unfamiliar with the product. However, I am definitely in the minority on this and think your idea of expanding the mythology thread to include the fads of today a good one.
You, Gene, and Tony C. should seriously consider collaborating on a book.
@Mike: My wife and I actually prefer the contests that give winners a job they want. That means more to us, I guess. We like Top Shot; the prize is money plus a job as an exhibition shooter. We like Food Network Star, the prize is a job as host of a cooking show. We especially like The Voice, because the prize is a recording contract and promotion as a singer, but just making it to the final eight or so has been enough exposure to jump start the careers of some of the contestants.
Cash isn’t bad, but it seems far more ephemeral than the experience of an actual job at a level a contestant was unable to land without winning the contest. A job is a learning experience, it develops contacts, it gives you insight into how things really work and how to navigate the industry. It dispels fantasy and replaces it with reality; to me that is the real life-changing experience.
Bron, you seem to lack a basic understanding of keeping an economy going by keeping money in circulation. Bonds, money market funds and the like is the financial equivalent of grandpa keeping his gold coins buried in a Mason jar in the back yard.
You are not paying carpenters, plumbers and welders salaries if you keep your money in savings accounts rather than checking accounts to pay salaries.
Otteray Scribe:
it is being invested in something. Stocks, bonds, currencies, something.
It is not sitting under a mattress.
@Slart: Trying to control behavior by outlawing something or mandating something historically doesn’t work.
I ask you to reconsider that; it is perhaps a hasty comment. We outlaw murder, burglary, armed robbery, rape, the use of carcinogenic pesticides … I believe all those behaviors are severely reduced by laws presenting a threat of punishment.
My point is (and this is backed up by much science) that every degree of separation between a decision maker and the ultimate effect of his decisions increases the effective sociopathy of the decider, in two ways. First, it makes his decision increasingly abstract in nature. Second, as we have been shown repeatedly in psychology experiments, the greater his perceived authority, the more likely his underlings are to execute even morally horrific acts at his command, to “follow orders.”
We cannot outlaw all acts of sociopathy, it is too ambiguous a concept. We cannot outlaw the 1% of born sociopaths, either. What we could outlaw is one element of the landscape that we know is generating effective sociopathy; by which I mean sociopathic behavior by people that are not clinical sociopaths, but act like sociopaths because the victims of their monetary decisions are anonymous to them and they do not ever have to witness any of the consequences of their decisions.
I am not sure why you think limiting companies to something like 200 employees would be horrible. It would not limit their income, capitalization, size, range, power or economic opportunity. It would limit the range of unilateral CEO ultimatums (at least that would be my intent) and force CEOs to negotiate with independent peers for services.
Some operations like the military or police force may require a monolithic force under one supreme commander, but they are not for-profit operations, and there is more at stake than profit.
It is hard for me to imagine a for-profit corporate situation that could not accomplished successfully if sub-divided into components smaller than 200 persons. The vast majority already are, if you look at typical corporate structures.
In re: Marie Antoinette and cake. The historical truth of the matter aside, the apocryphal story makes a great teaching tool illustrating the folly of greed, arrogance and excess.
As to Marie Antoinette the story is probably apocryphal, but the story is a good metaphor for what caused the French Revolution. The complete disregard of the French Nobility for the lives of everyone else led to a bloody end. I think that this result is repeated throughout history in one form or another. The problem is that power/wealth is an elixir that separates those with it from the lives of everyone else. It encourages a kind of “magical thinking” where every
immediate desire must be satisfied and people “below” one’s class are seen merely servant/pets, to be stroked or punished depending on the alacrity of their service provision. I see this happening to our country today and I see the support of this attitude in our mass culture.
I’ve said before that I am a devotee of TV “reality” shows, most of which deal with the “problems” of the rich and/or famous. Their day to day “frustrations” become drama eaten up by an envious audience wishing that they were in the same position to have to decide which mansion to buy. I could do a series of blogs alone on the mythology created by these shows. What they provide for me though is a look not into the lives of those portrayed, but in imagining the effect the programs have on their devotees. Another type of “reality” shows that I watch are the talent shows like “America’s Got Talent”. One can watch that show on many levels. Its plot is raising someone with a particular talent from obscurity to “stardom”. The $1,000,000 prize is actually an annuity to be paid out over forty years, do the math as to how life changing that would be for most. There is also the promise of a “show” (one performance) in Las Vegas.
Almost every contestant states how winning this will change their lives,fulfill all their dreams. Many do have that presumption that this will be their ticket to celebrity, which in turn would mean in today’s conflated mythology “nobility”. It’s all false, but for a culture so inculcated in a chimeric dream, it sustains the myth.
The fourth book of Campbell’s “Masks of God” is called “Creative Mythology”.
In it he mainly focused on the role literature has played in creating mythology and is rich in its quoting from and commenting on some of the great works of literature, from great writers, showing the background of mythological archetypes upon them. Were he alive today, I believe Campbell would have immersed himself in what we call “pop” culture to tease out the current mythology that shapes us via the information explosion.
The response to this particular blog has amazed and gratified me with the erudition of our commenters in expanding upon my thoughts, way beyond my offerings in the piece. My accolades also go to Jim Bradley for his role in illustrating how mythological themes run through even such sober topics as economics and serve to shape people’s thought patterns. Finally though where Dave Parker provided the spark for this blog and provided excellent comments, I have to acknowledge Gene Howington’s series of blogs on propaganda for providing the context. I think we are both pursuing the same aim, from slightly different directions. The difference is that I am way past my prime, or my desire in doing heavy research and so mostly rely on the accumulated knowledge of my 67 years. Gene has the skills and the desire to let himself be fully drawn into a topic and provide the exhaustive in depth research to really do his topic justice. In this respect I’m merely a dilettante, albeit a widely read one, whereas Gene is a legitimate scholar who brings his massive intellect to bear on what interests him.
Blouise,
There’s nothing wrong with choosing an interesting apocryphal myth over a boring truth, right? 😉
Tony C,
While I wont argue about your thesis regarding GoreTex and groups of 200 or more (I mostly agree), I think that legislating a maximum company size is a horrible idea–if you want to reduce company size, do something like granting tax breaks to companies with fewer workers (i.e. introduce a competitive advantage for smaller companies). Trying to control behavior by outlawing something or mandating something historically doesn’t work. For instance, CAFE standards have been relatively ineffective at increasing the fuel economy of American cars–raising the gas tax by $1 per gallon in in the seventies would probably have given us an average MPG around 100 by now…
Regarding Jim’s use of the term “free market”–I noticed he complained to me when I used the definition he gave…
I like the term “rebunked”… 😉
Bob,
Given the topic, I hesitate to comment, but I agree with you regarding the Freedom Tower. I also think that by using words like “freedom” or “hero” inappropriately we devalue them and lose the ability to recognize the real thing (this comment is seeming more appropriate for Gene’s propaganda series…).
Mike S.,
I think Jim’s comments fit in nicely on this thread–you couldn’t have asked for a better example of what you were talking about…
@Blouise: I actually heard a different version of this myth, from my father when I was a child. He read constantly, so I assume he read it somewhere. But I have not seen it in a search.
His story was that to increase financing the king ordered a new tax on bread. When an advisor told the king, in the presence of Marie, that the new tax would make bread more expensive than cake (brioche), Marie said, “Then let them eat cake.”
That was the one I heard first and believed, and it sounded more plausible to me then the clueless variant. Then I found out … Oh never mind. They were BOTH true, Blouise! Both of them!
Mike S:
It’s been said that great writing is easy since it builds up inside the author seeking an outlet and then bursts forth like a torrent through a dam. I’ve heard writers say it’s exhausting but the writing has to be captured while it flows.
Gibbon is measured in his approach and you can’t tell with absolute certainty where his heart lies, but the soul of the author peeks through the history to make it alive. It’s hard to lavish too much praise on Gibbon. It’s the one thing about which I could find no fault in Bill Buckley’s opinion.
@Blouise: My apologies. Consider it rebunked.
Tony C.,
Thanks for that additional info regarding GoreTex.
I am, however, going to ignore the info on Marie Antoinette as it debunks one of my favorite myths.
@Bron: Actually they do not invest it at all, they buy public stocks with it, or gamble it on derivatives. Public stock is not really an “investment,” because the companies you buy and sell do not benefit a dime from you buying or selling their stock. Other than their own shares of stock (which is usually reserved for incentive purposes) the company got the only money it could out of those shares long, long ago in their initial public offering. After that, everything else is a game of trading profit streams and nothing else, it creates no new jobs, no new facilities, no new products, no nuthin’.
That is how the stock market works, it is 0.01% financing of new companies, and 99.99% speculation on how companies are doing. Even most of the IPOs these days are not actually financing companies for business, they are owners of already successful companies (like Zuckerberg for Facebook, Yahoo, Google, eBay, and many others) cashing in, just monetizing their future profit streams in order to diversify and buy some toys. It isn’t really “finance” anymore.
The rich are not really that interested in taking risks and financing businesses. Just look, for example, at Mitt Romney’s portfolio: very little risk and mostly just income producing at the 10-12% level.
It is true that venture capitalists are typically funded by a stable of wealthy people, but their money managers put only about 10% of the investable money into VC firms, the rest is in stable dividend producing companies that are extremely unlikely to get into trouble. That isn’t an “investment” in a job-creating, competition-creating, product-creating new venture: P&G gets nothing from that stock purchase but an encrypted computer message redirecting a sliver of their dividend stream.
So, by raising the tax rate and pressuring the owner to reinvest in his OWN business, or his OWN new product or service, or to even start a whole NEW business, there will be in fact quite a difference in the outcome: jobs, innovation, and new competition and pressure on others to innovate even better. All of that is lost when people just buy an established business selling the same old Mac and Cheese they have been selling for fifty years without any real competition.
Bron sez: “The companies who make the profits invest them in something, they dont stuff it under a mattress.”
*************************************
Actually they do, figuratively speaking. They are hoarding the money. Talk to a banker from a small town, locally owned bank. They will tell you it is next to impossible to get a loan because big lenders are sitting on vast sums of money, some from the stimulus package. The only way to get out from under is to go back to pre-Reagan tax structures and increase regulation of banks and industries that provide public services such as health care, transportation and energy. The only way to avoid additional taxes would be to invest rather than sit on the money and pay executives obscene salaries and bonuses. There needs to be consequences for shipping jobs overseas. I am in favor of penalties that range from tax penalties to prison time. If a company is a person, then the people who run it should be subject to the same penalties as the company when the laws are broken. The threat of prison should be real.
So yes, they stuff our money under the mattress, don’t spend it on rebuilding the economy, but do spend it on themselves. If most modern large industry and banking were a person, they would meet all the diagnostic criteria for Antisocial Personalty Disorder; otherwise known as a psychopath.
Tony,
Thank you.
Bron, Which does a better job for most people:
invest in capital improvements in the company and hiring more employees
or
investing in paper