Business 101 – Why the wealthy are good for all Americans

The Left has been railing on the wealthy for decades.  They believe there is some sort of money tree and somehow the wealthy get up earlier and grab the majority of the wealth and the rest of us just get whatever is left over.  That is simply not the case of course.  Aside from the fact that the wealthy EARN their wealth (even trust funders got their money from someone who at some point EARNED it) and aside from the fact they already pay the majority of taxes in the United States, the wealthy help invest in and create jobs across this country because they have the money.   I’m going to try to make this simple like my last blog ‘It’s the Spending Stupid – Tax Cuts do NOT increase the Deficit.’  

The Left believes that people spending is what runs the economy – this is part of it but not the whole story.  Yes people have to spend money to keep businesses going but how did those businesses get started in the first place?  In many cases due to wealthy investors who have enough money that they are willing to risk investing in someone else’s idea so they can make more money.  The risk they take is that they lose all of their money if the idea doesn’t work.  I’m going to attempt to do this with a simple scenario that will hopefully make people understand the reality of business 101 and economics 101.

Person A is a wealthy businesswoman.  She runs her own company and makes millions of dollars a year.   We’ll call her Ms. Banks.

Person B is a middle class worker.  He currently works for a large corporation making decent money but has an idea that he’d love to put into production yet doesn’t have the funds to start a company and get the product manufactured and into the marketplace.  He needs a minimum of $500,000 in start-up costs.  He cannot get a loan for that much money.  We’ll call him Mr. Class.

Person C is an unemployed member of the working class.  He was working in a factory as a line supervisor but was laid off due to downsizing.   He is currently only purchasing the basics he needs to get by and refuses to use his credit cards in order to keep his debt low while unemployed.  We’ll call him Mr. Worker.

Mr. Class (person B) discovers that Ms. Banks (person A) likes to spend some of her money on start-up companies.  Since she is wealthy, she has the money and a start-up can either make her more money or lose her money but she only invests what she is willing to lose.  Mr. Class meets with Ms. Banks to present his brilliant idea to her.  Ms. Banks decides to ‘loan’ Mr. Class the $500,000 he needs to start his manufacturing company and get his product to the public.  If the product is successful, Ms. Banks will make a percentage on her investment and Mr. Class can become a wealthy entrepreneur himself.  If the product fails, Ms. Banks will lose the money she invested and Mr. Class will have to go back to working for someone else as he was before.

Mr. Class starts his new manufacturing company and must hire employees.  Mr. Worker (person C) is hired as a line supervisor.  The product is a great success!  Ms. Banks makes money on her investment; Mr. Class is now a successful business owner and Mr. Worker is gainfully employed again so that he can now spend money above his basic needs and help to stimulate the economy by buying the very product he is helping to produce which helps the company to succeed.

Without the wealthy investor, the entrepreneur would not have been able to make his dream a reality.

Without the wealthy investor, the worker would still be unemployed.

Without the wealthy investor, the worker wouldn’t have excess money to spend on those things that aren’t necessities and help to boost the economy.

This is a circular and very easy to understand economic reality of capitalism.  The entrepreneur creates, the wealthy investor invests and the worker is gainfully employed.  All three put money back into the economy because they have it which also further aids in boosting the economy.

Raising taxes on wealthy investors curbs the amount of money they are willing to part with to invest in companies or start-ups.  Raising taxes curbs the spending of those without jobs to keep businesses selling products in business.

It isn’t rocket science.  It’s business 101.  The economy doesn’t simply rely on people spending and the economy doesn’t simply rely on businesses creating jobs or investors investing.  It is a circular economic way of life that gets thrown a curve when taxes are raised – on the wealthy especially.

Not all small businesses rely on wealthy investors – they either save their own money or get loans from a bank (which of course does rely on wealthy investors) or in some cases loans from the federal government (which of course are our taxpayer dollars being put at risk and also relies on the wealthy in the form of taxes since the wealthy pay the majority of taxes). 

Of course there are all kinds of economic factors that come into play such as ridiculous government regulations,  political games that are played by giving political favorites federal grants etc… but the point is that without wealthy investors, many companies would not exist today.  Vilifying and demonizing the wealthy only shows how incredibly ignorant Democrats are in D.C. and around the country.

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