The rich are the least understood minority. That fact lends them to be vilified by the very politicians at the root of our serious economic problems.
The facts are:
The rich take risks with their money. When they invest their expendable income, they are risking the loss of that income. Often the rich loose a great deal of money in failed businesses. Most middle and lower income people would not take that kind of risk, even if they could. Generally the greater the risk, the greater the potential reward as well as the potential loss. There is nothing unfair about that equation.
The rich employ people. They hire people to do a multitude of tasks for businesses. This adds to the risk. The wrong people can quickly destroy an investment. They depend on effective employees and reward them accordingly. Those who do not, suffer the consequences. Basically, you get what you pay for. As President Reagan pointed out, “nobody ever got a job from a poor man.” Conversely the rich must not overcompensate. Overcompensation easily leads to the demise of a business for the owner and eventual loss of employment. Unions were originally designed to fairly compensate employees, and ensure unsafe working conditions. However many unions have overstepped their principles and done harm to many businesses thus harming the very employees they supposedly intend to help.
The rich provide benefits, give to charities, and help employees save for retirement. Monetary compensation alone has evolved to group insurance plans, 401K’s, other matching plans, and other perks and benefits. The employer can provide group benefits far more efficiently than individuals can. Choosing and managing these are another responsibility that the rich take on. It is in their best interest to maximize what they can provide in order to draw and maintain effective workers.
The rich have to compete. No business is without competitors who wish to capture a greater market share. In order to do so, the business owner must run the business as efficiently and effectively as possible or risk reduced demand, thus a reduced workforce. Basically the rich look out for their workers by looking out for the business.
The rich have headaches. That’s a general expression for all that a business owner has to think about to make ends meet in his/her business. These headaches come in the form of the economy, market fluctuations, suppliers, connected services, fashion or technical trends, political changes, taxes (many kinds), accounting, making changes, growth, retooling, human resources, discipline, establishing a corporate culture, advertising, etc, etc, to include balancing the priorities of all the above and more. If the rich don’t address these carefully, they quickly suffer greater headaches.
The rich make large charitable contributions. Often contributions provide tax breaks, but a tax break doesn’t exceed the contribution.
The rich hoard very little money, (percentage wise). They understand that simply saving does not produce what investing can. Therefore the money that the rich earn is recycled to do more of the same, employ more people, boost the economy, provide benefits, etc. Most of their money creates more employment. To blame the rich for having too much money is like blaming your heart for having more blood in it than any other organ. The rich are the most effective stimulus to the economy.
When the rich stimulate the economy it is done effectively and efficiently for all the reasons above. When the government attempts to stimulate the economy it is neither efficient nor effective because the government is not accountable. Furthermore Government “stimulus money” is first removed from the economy through taxes, not earned by adding value to anything. Government stimulation is like opening the refrigerator door in an attempt to cool a room. The result is a net heating of the room because the heat expelled out the back of the refrigerator is always greater than the refrigeration it creates.
The rich spend their money. Yes, they live extravagant lives; possess tremendous homes; and own luxurious yachts. Consider all who are employed servicing those lives, building those homes, making and maintaining the yachts. All that the rich spend is returned to the economy.
The rich pay taxes. We hear of the huge tax shelters and deductions that “fat cats” get. However it is their businesses that have such tax breaks not the individuals. In fact due to our “graduated tax” system, the rich pay a much greater percentage of personal income. Tax breaks are government incentives to influence how a business operates. If there is any unfairness, it is the government (politicians) who are at fault, not the businesses who use such breaks wisely or else fail.
The rich sometimes fail. With some wrongful exceptions of late, the rich run the risk of “loosing everything.” Safety nets such as the FDIC only insure losses up to a certain amount. The rich do business that far exceeds those amounts; thus they often “work without a net.” When a business fails, the rich often become devastated. Interestingly enough, they often find their way back to wealth because once they have traveled the road to success they understand how to do it again, often with better results. It is not money that creates money; it is knowing how to venture.
The rich are responsible. When a poor man breaks something expensive, he walk away because he can not compensate the loss and there is no recourse. When a person of means financially harms someone, they make restitution. If not, they may find themselves paying court fees as well.
The rich are vulnerable. No one files suit against a poor man. However people take advantage of the rich in every way imaginable. Because the rich have “deep pockets” they risk carrying the brunt of any conflict. It is not uncommon for the rich to be found 1% at fault, yet assigned 99% of the financial burden for no other reason than the ability to pay. So, do you still want to be rich?
How is a failing economy the fault of the rich not being taxed enough? First they are taxed more. What they aren’t taxed, they reinvest, thus stimulating the economy more effectively than through the government. What they don’t invest, they spend, which is also good for the economy. There is almost nothing the rich can do with their money that isn’t good for everyone. Even if they store it away in a bank, it provides liquidity for the bank to invest.
God bless the rich man because he carries the real burden of our economy.Wake up Right! Subscribe to our Morning Briefing and get the news delivered to your inbox before breakfast!