How To Have Economic Prosperity: Advice From Venture Capitalist

Nick Hanauer, wealthy venture capitalist, has been advising the country for the past few years how to become more prosperous: put more money in the hands of consumers. He recently repeated his advice at a Senate hearing. Here is his testimony. It is worth reading the entire presentation.

In some respects, Hanauer's explanation isn't much different from Henry Ford's insight when he paid his factory workers higher than the going wage. If his workers couldn't afford to buy his product, Ford realized, then his own enterprise wouldn't prosper. The super wealthy keep forgetting that insight.

Hanauer gets it right

"When someone like me calls himself a job creator, it sounds like we are describing how the economy works. What we are actually doing is making a claim on status, power and privileges.The extraordinary differential between the 15-20% tax rate on capital gains, dividends, and carried interest for capitalists, and the 39% top marginal rate on work for ordinary Americans is just one of those privileges.
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Rather, jobs are a consequence of an ecosystemic feedback loop animated by middle- class consumers, and when they thrive, businesses grow and hire, and owners profit in a virtuous cycle of increasing returns that benefits everyone."