Income inequality: one plutocrat’s view

Nick Hanauer is one rich guy. The Seattle entrepreneur and venture capitalist has an estimated net worth of $1 billion. He willingly labels himself as a capitalist and a plutocrat. Yet he believes and actively calls for increasing taxes on the super wealthy to fund investment in policies that expand the middle class, not because it’s morally or socially right, but because it’s good for business.

His TED talks (one included here) have caused controversy, including a spat with Forbes magazine. Still, I think his viewpoint is worth hearing.

I find the Forbes critique unpersuasive on a couple fronts:

  • I think the author misses the point about Henry Ford paying higher wages. It wasn’t necessarily or just so that Ford workers would literally go out and buy Ford cars. It was, in part, so that Ford workers could participate in the middle class.
  • I think the author misses the point Hanauer was making about Wal-mart wages. The point is that by paying unlivable wages, Wal-mart forces its workers to seek tax-funded assistance. (Forbes reports that Wal-mart workers use $6 billion inĀ  assistance funded by tax dollars.) If Hanauer’s fellow plutocrats want to shrink government, lower taxes, and reduce dependency, they should start by paying livable wages.

Hanauer points out that Seattle and Washington state have some of the highest minimum wages in the nation, and yet are thriving economically despite plutocratic warnings about higher minimum wages killing jobs. Maybe Forbes should be investigating the highest- and lowest-wage cities and states to find a correlation.

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