Myth of the Wealthy Job Creator
One of the easiest political targets are tax-cuts. Nobody likes to work really hard and then see a large chunk of the fruits of their labors going to taxes. It’s therefore become common wisdom that cutting taxes is the only way to grow the economy, by “returning” this hard earned money back.
There are however a class of people with so much money they don’t need to work. These people are the true capitalists. The invest money into businesses or property and reap the dividends and capital gains. It’s harder to justify giving large tax cuts to the already wealthy who aren’t really working for their money.
Many also take small but high-level part-time jobs such as on a board of directors for their own or friendly companies. They might also given themselves an executive level position but actually delegate the day-to-day operations of the company to underlings. They can run multiple companies this way and spend time traveling to procure other business opportunities. Though others are actually doing most of the work, these positions pay the most and give lucrative stock options when the companies make more money.
To justify giving even these people tax cuts, there developed a mythology that letting them keep more of their business income and capital gains they will invest it back into the economy and create more jobs.
The poster child for this type of person is Elon Musk, who was at one-time the “wealthiest” person on the planet. Musk was born in an already wealthy family, but was able to create and sell a small internet company for his personal fortune. He did use this money to create and sell more companies to become obscenely rich.
Once becoming wealthy, Musk bought other companies and used each one he owned to grow his own personal wealth. While initially unprofitable on their own, they were able to secure government money and favorable tax-credits to expand. It was only through these government subsidies and selling carbon credits his car company Tesla was able to become “profitable”.
While Tesla was at one time the most valuable car company, it was not the one making the most cars nor the most money. Tesla was valuable because wealthy people and fund managers bought the stock believing in the future of the company. It is the high value of Tesla stock which Musk used to mitigate failures in his other companies (he was working part-time at each).
The most high-profile acquisition of Musk was his purchase of Twitter in 2022. It’s unclear the true reasons why Musk initially made a ludicrous offer to buy the publicly traded company and take it private. While he claimed to take an interest in “free-speech”, the per share price and unwillingness to actually consummate the deal suggested he may have bought the company as a joke. Others suggest he only wanted to buy the company to shut down the account tracking his personal jet.
Did Musk use his money to expand Twitter and create jobs? Current estimates are that over 50% of the company has been laid off, with many more quitting in the face of declining working conditions. It also seems like the innovations pushed by Musk has led to an exodus of advertisers. It seems like Musk is now trying to bring in far-right contributors. This is why I left the platform, and I suspect there will be many others too.
If the wealthiest person in the world can’t use his fortune to create successful companies and increase employment, does it draw in to question the assertion that giving the wealthy more money is the best way to create jobs?