This Selfish Ayn Rand Business Philosophy Is Ruining The US Economy (Demo)

On September 25, 2013, Henry Blodget writes on BusinessInsider.com:

Forbes contributor Harry Binswanger, who is a disciple of the writer Ayn Rand, argued this week that people who make $US1+ million a year are so valuable to society that they shouldn’t pay any taxes.

Far from these million-dollar earners paying more taxes, Binswanger argued, the rest of America should “give back” to the 1% by thanking them for their service to the country and rewarding them by exempting them from taxation.

This argument is the logical extension of an argument that many American entrepreneurs and investors make, which is that they are the country’s “job creators” and therefore deserve almost all of the country’s income and wealth. These “job creators,” this argument goes, should pay their employees as little as possible and keep every penny of profit for themselves. After all, they deserve it: They’re the ones who “create” the jobs that sustain the country.

It’s no surprise why this argument is popular among entrepreneurs and investors: Instead of making them feel selfish about taking such a big share of the country’s wealth for themselves, it actually makes them feel magnanimous. If they weren’t “creating all those jobs,” then most Americans would have nothing to do!

Unfortunately, this argument is both startlingly selfish and economically wrong.

Profits as a % of the economy are at the highest level in history.

What actually “creates jobs” in an economy is a healthy economic ecosystem, one comprised of entrepreneurs, investors, employees, and, critically, customers.

Successful entrepreneurs do play a valuable and important role in this ecosystem: They start companies that develop products and services that people want, and they guide the companies that produce them.

Successful investors also play a valuable and important role: They provide the capital necessary for companies to invest in new products and services.

But without talented employees who make a company’s products and services, and — just as important — without financially healthy customers who buy them, entrepreneurs and investors can’t create any sustainable jobs.

So to suggest that entrepreneurs and investors deserve all the credit or compensation in the economy is absurd.

It’s also absurd to suggest that placing all of a country’s wealth in the hands of entrepreneurs and investors is somehow good for the economy. The 100+ million Americans who work for others, after all, aren’t just “employees.” They’re also American consumers. Every penny they earn is spent on buying products and services. So sharing more of a company’s wealth with the folks who create it isn’t just the right thing to do. It’s also good for the economy.