Politics

Ultra-rich man’s letter: “To My Fellow Filthy Rich Americans: The Pitchforks Are Coming”

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You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor. Then I founded aQuantive, an Internet advertising company that was sold to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own a bank. I tell you all this to demonstrate that in many ways I’m no different from you. Like you, I have a broad perspective on business and capitalism. And also like you, I have been rewarded obscenely for my success, with a life that the other 99.99 percent of Americans can’t even imagine. Multiple homes, my own plane, etc., etc. You know what I’m talking about. In 1992, I was selling pillows made by my family’s business, Pacific Coast Feather Co., to retail stores across the country, and the Internet was a clunky novelty to which one hooked up with a loud squawk at 300 baud. But I saw pretty quickly, even back then, that many of my customers, the big department store chains, were already doomed. I knew that as soon as the Internet became fast and trustworthy enough—and that time wasn’t far off—people were going to shop online like crazy. Goodbye, Caldor. And Filene’s. And Borders. And on and on.

Realizing that, seeing over the horizon a little faster than the next guy, was the strategic part of my success. The lucky part was that I had two friends, both immensely talented, who also saw a lot of potential in the web. One was a guy you’ve probably never heard of named Jeff Tauber, and the other was a fellow named Jeff Bezos. I was so excited by the potential of the web that I told both Jeffs that I wanted to invest in whatever they launched, big time. It just happened that the second Jeff—Bezos—called me back first to take up my investment offer. So I helped underwrite his tiny start-up bookseller. The other Jeff started a web department store called Cybershop, but at a time when trust in Internet sales was still low, it was too early for his high-end online idea; people just weren’t yet ready to buy expensive goods without personally checking them out (unlike a basic commodity like books, which don’t vary in quality—Bezos’ great insight). Cybershop didn’t make it, just another dot-com bust. Amazon did somewhat better. Now I own a very large yacht.

But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?

I see pitchforks.

At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.

But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.

And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.

Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. I know you fellow .01%ers tend to dismiss this kind of argument; I’ve had many of you tell me to my face I’m completely bonkers. And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction.

The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he raised their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.

What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.

It’s when I realized this that I decided I had to leave my insulated world of the super-rich and get involved in politics. Not directly, by running for office or becoming one of the big-money billionaires who back candidates in an election. Instead, I wanted to try to change the conversation with ideas—by advancing what my co-author, Eric Liu, and I call “middle-out” economics. It’s the long-overdue rebuttal to the trickle-down economics worldview that has become economic orthodoxy across party lines—and has so screwed the American middle class and our economy generally. Middle-out economics rejects the old misconception that an economy is a perfectly efficient, mechanistic system and embraces the much more accurate idea of an economy as a complex ecosystem made up of real people who are dependent on one another.

Which is why the fundamental law of capitalism must be: If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around.

On June 19, 2013, Bloomberg published an article I wrote called “The Capitalist’s Case for a $15 Minimum Wage.” Forbes labeled it “Nick Hanauer’s near insane” proposal. And yet, just weeks after it was published, my friend David Rolf, a Service Employees International Union organizer, roused fast-food workers to go on strike around the country for a $15 living wage. Nearly a year later, the city of Seattle passed a $15 minimum wage. And just 350 days after my article was published, Seattle Mayor Ed Murray signed that ordinance into law. How could this happen, you ask?

It happened because we reminded the masses that they are the source of growth and prosperity, not us rich guys. We reminded them that when workers have more money, businesses have more customers—and need more employees. We reminded them that if businesses paid workers a living wage rather than poverty wages, taxpayers wouldn’t have to make up the difference. And when we got done, 74 percent of likely Seattle voters in a recent poll agreed that a $15 minimum wage was a swell idea.

The standard response in the minimum-wage debate, made by Republicans and their business backers and plenty of Democrats as well, is that raising the minimum wage costs jobs. Businesses will have to lay off workers. This argument reflects the orthodox economics that most people had in college. If you took Econ 101, then you literally were taught that if wages go up, employment must go down. The law of supply and demand and all that. That’s why you’ve got John Boehner and other Republicans in Congress insisting that if you price employment higher, you get less of it. Really?

The thing about us businesspeople is that we love our customers rich and our employees poor.

Because here’s an odd thing. During the past three decades, compensation for CEOs grew 127 times faster than it did for workers. Since 1950, the CEO-to-worker pay ratio has increased 1,000 percent, and that is not a typo. CEOs used to earn 30 times the median wage; now they rake in 500 times. Yet no company I know of has eliminated its senior managers, or outsourced them to China or automated their jobs. Instead, we now have more CEOs and senior executives than ever before. So, too, for financial services workers and technology workers. These folks earn multiples of the median wage, yet we somehow have more and more of them.

140624_fatcats_grid_1160
The Art of the Fat Cat A century and a half of soaking the rich—with ink.
By MATT WUERKER - (politico)

The thing about us businesspeople is that we love our customers rich and our employees poor. So for as long as there has been capitalism, capitalists have said the same thing about any effort to raise wages. We’ve had 75 years of complaints from big business—when the minimum wage was instituted, when women had to be paid equitable amounts, when child labor laws were created. Every time the capitalists said exactly the same thing in the same way: We’re all going to go bankrupt. I’ll have to close. I’ll have to lay everyone off. It hasn’t happened. In fact, the data show that when workers are better treated, business gets better. The naysayers are just wrong.

Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our economy at great risk. But in Seattle, our current minimum wage of $9.32 is already nearly 30 percent higher than the federal minimum wage. And has it ruined our economy yet? Well, trickle-downers, look at the data here: The two cities in the nation with the highest rate of job growth by small businesses are San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The fastest-growing big city in America? Seattle. Fifteen dollars isn’t a risky untried policy for us. It’s doubling down on the strategy that’s already allowing our city to kick your city’s ass.

It makes perfect sense if you think about it: If a worker earns $7.25 an hour, which is now the national minimum wage, what proportion of that person’s income do you think ends up in the cash registers of local small businesses? Hardly any. That person is paying rent, ideally going out to get subsistence groceries at Safeway, and, if really lucky, has a bus pass. But she’s not going out to eat at restaurants. Not browsing for new clothes. Not buying flowers on Mother’s Day.

Is this issue more complicated than I’m making out? Of course. Are there many factors at play determining the dynamics of employment? Yup. But please, please stop insisting that if we pay low-wage workers more, unemployment will skyrocket and it will destroy the economy. It’s utter nonsense. The most insidious thing about trickle-down economics isn’t believing that if the rich get richer, it’s good for the economy. It’s believing that if the poor get richer, it’s bad for the economy.

I know that virtually all of you feel that compelling our businesses to pay workers more is somehow unfair, or is too much government interference. Most of you think that we should just let good examples like Costco or Gap lead the way. Or let the market set the price. But here’s the thing. When those who set bad examples, like the owners of Wal-Mart or McDonald’s, pay their workers close to the minimum wage, what they’re really saying is that they’d pay even less if it weren’t illegal. (Thankfully both companies have recently said they would not oppose a hike in the minimum wage.) In any large group, some people absolutely will not do the right thing. That’s why our economy can only be safe and effective if it is governed by the same kinds of rules as, say, the transportation system, with its speed limits and stop signs.

Wal-Mart is our nation’s largest employer with some 1.4 million employees in the United States and more than $25 billion in pre-tax profit. So why are Wal-Mart employees the largest group of Medicaid recipients in many states? Wal-Mart could, say, pay each of its 1 million lowest-paid workers an extra $10,000 per year, raise them all out of poverty and enable them to, of all things, afford to shop at Wal-Mart. Not only would this also save us all the expense of the food stamps, Medicaid and rent assistance that they currently require, but Wal-Mart would still earn more than $15 billion pre-tax per year. Wal-Mart won’t (and shouldn’t) volunteer to pay its workers more than their competitors. In order for us to have an economy that works for everyone, we should compel all retailers to pay living wages—not just ask politely.

We rich people have been falsely persuaded by our schooling and the affirmation of society, and have convinced ourselves, that we are the main job creators. It’s simply not true. There can never be enough super-rich Americans to power a great economy. I earn about 1,000 times the median American annually, but I don’t buy thousands of times more stuff. My family purchased three cars over the past few years, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. I bought two pairs of the fancy wool pants I am wearing as I write, what my partner Mike calls my “manager pants.” I guess I could have bought 1,000 pairs. But why would I? Instead, I sock my extra money away in savings, where it doesn’t do the country much good.

So forget all that rhetoric about how America is great because of people like you and me and Steve Jobs. You know the truth even if you won’t admit it: If any of us had been born in Somalia or the Congo, all we’d be is some guy standing barefoot next to a dirt road selling fruit. It’s not that Somalia and Congo don’t have good entrepreneurs. It’s just that the best ones are selling their wares off crates by the side of the road because that’s all their customers can afford.

So why not talk about a different kind of New Deal for the American people, one that could appeal to the right as well as left—to libertarians as well as liberals? First, I’d ask my Republican friends to get real about reducing the size of government. Yes, yes and yes, you guys are all correct: The federal government is too big in some ways. But no way can you cut government substantially, not the way things are now. Ronald Reagan and George W. Bush each had eight years to do it, and they failed miserably.

Republicans and Democrats in Congress can’t shrink government with wishful thinking. The only way to slash government for real is to go back to basic economic principles: You have to reduce the demand for government. If people are getting $15 an hour or more, they don’t need food stamps. They don’t need rent assistance. They don’t need you and me to pay for their medical care. If the consumer middle class is back, buying and shopping, then it stands to reason you won’t need as large a welfare state. And at the same time, revenues from payroll and sales taxes would rise, reducing the deficit.

This is, in other words, an economic approach that can unite left and right. Perhaps that’s one reason the right is beginning, inexorably, to wake up to this reality as well. Even Republicans as diverse as Mitt Romney and Rick Santorum recently came out in favor of raising the minimum wage, in defiance of the Republicans in Congress.

***

One thing we can agree on—I’m sure of this—is that the change isn’t going to start in Washington. Thinking is stale, arguments even more so. On both sides.

But the way I see it, that’s all right. Most major social movements have seen their earliest victories at the state and municipal levels. The fight over the eight-hour workday, which ended in Washington, D.C., in 1938, began in places like Illinois and Massachusetts in the late 1800s. The movement for social security began in California in the 1930s. Even the Affordable Health Care Act—Obamacare—would have been hard to imagine without Mitt Romney’s model in Massachusetts to lead the way.

Sadly, no Republicans and few Democrats get this. President Obama doesn’t seem to either, though his heart is in the right place. In his State of the Union speech this year, he mentioned the need for a higher minimum wage but failed to make the case that less inequality and a renewed middle class would promote faster economic growth. Instead, the arguments we hear from most Democrats are the same old social-justice claims. The only reason to help workers is because we feel sorry for them. These fairness arguments feed right into every stereotype of Obama and the Democrats as bleeding hearts. Republicans say growth. Democrats say fairness—and lose every time.

But just because the two parties in Washington haven’t figured it out yet doesn’t mean we rich folks can just keep going. The conversation is already changing, even if the billionaires aren’t onto it. I know what you think: You think that Occupy Wall Street and all the other capitalism-is-the-problem protesters disappeared without a trace. But that’s not true. Of course, it’s hard to get people to sleep in a park in the cause of social justice. But the protests we had in the wake of the 2008 financial crisis really did help to change the debate in this country from death panels and debt ceilings to inequality.

It’s just that so many of you plutocrats didn’t get the message.

Dear 1%ers, many of our fellow citizens are starting to believe that capitalism itself is the problem. I disagree, and I’m sure you do too. Capitalism, when well managed, is the greatest social technology ever invented to create prosperity in human societies. But capitalism left unchecked tends toward concentration and collapse. It can be managed either to benefit the few in the near term or the many in the long term. The work of democracies is to bend it to the latter. That is why investments in the middle class work. And tax breaks for rich people like us don’t. Balancing the power of workers and billionaires by raising the minimum wage isn’t bad for capitalism. It’s an indispensable tool smart capitalists use to make capitalism stable and sustainable. And no one has a bigger stake in that than zillionaires like us.

The oldest and most important conflict in human societies is the battle over the concentration of wealth and power. The folks like us at the top have always told those at the bottom that our respective positions are righteous and good for all. Historically, we called that divine right. Today we have trickle-down economics.

What nonsense this is. Am I really such a superior person? Do I belong at the center of the moral as well as economic universe? Do you?

My family, the Hanauers, started in Germany selling feathers and pillows. They got chased out of Germany by Hitler and ended up in Seattle owning another pillow company. Three generations later, I benefited from that. Then I got as lucky as a person could possibly get in the Internet age by having a buddy in Seattle named Bezos. I look at the average Joe on the street, and I say, “There but for the grace of Jeff go I.” Even the best of us, in the worst of circumstances, are barefoot, standing by a dirt road, selling fruit. We should never forget that, or forget that the United States of America and its middle class made us, rather than the other way around.

Or we could sit back, do nothing, enjoy our yachts. And wait for the pitchforks.

___________________

Nick Hanauer is a Seattle-based entrepreneur.

 

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  • VertexWolf

    Amazing article. Obama is purposely driving class warfare to destroy America. The idiot needs to be impeached on one of his zillion scandals and replaced with a new guy with a brain and heart for America, that has a real birth certificate that carries it on him for anyone to see at anytime.

    • Harry Cardillo

      Obama is just another puppet. Focusing attention on him takes away from where the true focus should be. Which this article clearly indicates is some percentage of the very top of the food chain.

    • Dartmouth ’11

      You clearly missed the entire point of this article. This guy is saying that Obama’s call to raise minimum wage is actually the correct stance, just that his methods and reasons for doing so are wrong (social justice rather than growth). Also you seriously believe Barack Obama’s birth certificate is fake. Do you understand how many people and government agencies would have to lie for that to be true? I bet you’re one of those idiots that don’t vaccinate their children too…

    • Guest

      clearly didn’t read the article at all. There is nothing from Obama on any of this. The author only refers to Obama in passing. He states clearly several times that both parties share blame for the state of things and that both parties are clinging to outdated in incorrect philosophies to bolster their position.

    • Four

      Making binary statements like this one keeps the masses attacking each other instead of the real enemy. You are the real problem.

    • Ree

      Your ability to read is only surpassed by your idiocy.

    • imageWIS

      “that has a real birth certificate that carries it on him for anyone to see at anytime.”

      Ah, yes, the debunked racism masquerading as defense of the constitution. Any more drivel you want to spew, you racist??

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  • http://almostreadytogoamish.blogspot.com/ Johnny

    Initially read the headline and thought this was an Onion article, but I’m glad I read this. Who knows if this will make any difference though

  • Jason

    This guy gets it, trickle down is a bad joke played on everyone. If people dont have money to buy, businesses cant expand and higher new workers. No one is going to expand and higher more if they there is no demand, demand must come first. Same deal with taxes, nobody and I mean nobody will turn down increased profits because of higher taxes as long as they are still making more money. These are all just lies so many repeat even though they have repeated proven false. And I am no democrat/progressive, I just believe in looking at the facts/reality. And the reality is the current path neither good nor sustainable.

    • Harry Cardillo
    • Anon

      The big problem with trickle down is it’s only a trickle ;).
      Thing is there’s too much short sighted selfishness around and it’s not just the 0.01% – just look at the US healthcare. “Everyone” didn’t want to pay for the poor, but they were still paying anyway in far more expensive ways – via the poor queuing up in ERs or committing crimes to get $$$ or to go to prison to get healthcare or being too sick to work and help the economy. And now because of all the selfishness and stupidity you get a mutated monstrosity called Obamacare instead of something sane like in civilized countries.

      • Jason

        All true.

        I anti-big government as much as a next guy. However, I am also a pragmatist and you have to look at what works and whats the best, or at least the least bad option. A universal healthcare system makes the most sense. So are those against it telling me that we can look at the various systems out there, find the best one and address its shortcomings? With all the smart people we have, we cant develop a system that works better? The current model obviously broken and made healthcare too expensive to afford and that system will collapse under its own weight.

        And frankly, to me, insurance companies serve zero purpose and do not provide anything of value in the process. They do not provide any actual healthcare and all the money they get is pulled out of the actual healthcare system.

      • http://elitistagenda.com/ Harry Cardillo

        You’re not going to get what benefits people because the bottom line in most policy decisions is who makes money and who pays. Obamacare is just another wealth transferring device so the top can continue to skate. It is paid by the middle. The government has in fact guaranteed the losses of insurance companies:
        THE AFFORDABLE CARE ACT: MISLABELING MORE CORPORATE WELFARE
        http://elitistagenda.com/2014/06/21/affordable-care-act-mislabeling-corporate-welfare/

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  • Harry Cardillo

    ASK FOR MORE WEALTH EQUALITY AND EXPECT TO HAVE THEM SHOOT THE MESSENGER
    http://elitistagenda.com/2014/05/19/ask-for-more-wealth-equality-and-expect-to-have-them-shoot-the-messenger/

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  • Godfrey Yew

    From Capitalism we move to Feudalism then to socialism and communism then back to Capitalism and we start all over. The evolution of economics.

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  • Fatima Phoenix

    Employees = Customers. Customers = Profit. Who’da guessed it…

    • spam 90210

      why stop at $15/hr? Rich employees will buy all kinds of stuff. Let’s do $5,000/hr.

      • Jim

        You wanna be fair? How bout returning to the minimum wage of the 70s, when you could still be middle class. That would be $22.00 in current dollars. On the other hand, worker productivity is up substantially since then, so make it closer to $30.00. That would actually be fair. Lots of people could afford to live, and the economy would see a heckuva lot more money flow.

        • http://kara-d.tumblr.com/ Kara D

          I’m from Australia..there the minimum wage if you’re over 21 is $20something an hour…and tho things are expensive everyone goes out to eat lots, the economy is going awesome, and we have free universal health care and subsidized afordable university :). It works.

          • jdmeth

            How many illegal immigrants do you have walking in? How much of the population is African? Hispanic? We have two states with more population and two more almost equal. National defense spending? Plus our polititions are stupider than yours.

          • Chardonnaysippingsocialist

            jdmeth – have you heard what comes out of the Australian PM’s mouth! Rivals Bush as one of the most stupid politicians of all time. Australia does have the highest minimum wage, free public health and subsidised tertiary education but not for long.

          • DiaboloMootopia .

            Whitey doesn’t want to help people who don’t look like him.

      • dantes342

        Typical moronic response. Why not just try something more reasonable than poverty wages? That’s literally all that’s being suggested.

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  • thetruthisoutthere32 .
  • Anon

    His proposal may work fine in the near term. But he should be aware there is a bigger problem ahead.: https://www.youtube.com/watch?v=VOMWzjrRiBg
    We might be able to buy a bit more time by colonizing space and mining the asteroids. We should use some of our “fossil fuel capital” on Earth to try this before we use/burn most of it up and it becomes much much harder. Giving the poor higher salaries will increase resource usage and depletion of our vast but very finite world, but it may buy us stability which may help extend humanity’s borders beyond this planet.

    • Joanna Olsen

      There is a solution to this problem on the way http://www.solarroadways.com/intro.shtml … and they already raked in double the amount needed to continue developing the solution https://www.indiegogo.com/projects/solar-roadways … so though the issue of declining oil/gas/coal reserves is worrisome, I find projects like Solar Roadways give me hope for the future.

      • glaurent
        • Joanna Olsen

          Like I said … the initial money was for continuing the project, so it is not like I thought they could cover all the roadways with just 2 million $ … and though it might not be feasible in the near future it is still a project which give me hope. It tells me people are working on getting more reliable sources of energy than what we have.

          • glaurent

            Please read the articles, it’s not just a matter of cost. The concept itself is clearly not as sound as it seems.

            That said, yes plenty of people are working on this problem. The fact that feasible, reliable solutions are yet to be found should tell you that it’s a damn hard one. Like you I have hope it will be solved, human ingenuity is quite impressive. But I don’t expect things to be easy.

          • Joanna Olsen

            I know, it is not just about cost. One of the first things I thought about when I heard of the project some weeks ago was how slippery the surface would be … what would the road surface grip be like … but still … it might be good in some places where it is less important with good surface grip.

            The cost of installing etc. is less important … if the need is great then the cost will be what it is and the cost of doing nothing will certainly be higher, right?!

            Had it been easy then somebody would probably already have made a solution. Still I find it is a nice thought and inspiring … :)

          • glaurent

            I think it could work pretty well for parking lots for instance, but I don’t see how it can scale to a whole road network. We agree on the inspiring aspect, though :)

      • Sang_froid

        A great idea … however,the resources required to build it may not be available by the time it becomes feasible to begin manufacturing, transporting and laying these roadways.

    • vectoron

      Really peak oil? What are you still living 10 years ago? Solar Energy is on an exponential curve, all models point to energy decentralization in the next 10-15 years. Talking about peak oil is like saying in the 80s that doing a trillion calculations would never be possible. This is not to mention that we are breaking massive ground in fusion power. The future of power will not have anything to do with fossil fuels.

      • glaurent

        Oil isn’t used only for energy (plastics and a whole part of the chemical industry), and at the moment we do not have a battery technology good enough to replace it in vehicles. Yes, I’m aware of the Tesla, but there is not enough lithium on the planet to make enough batteries for hundreds of millions of cars, and then you have the way harder problem of planes. Peak oil is very real, and very much a problem, that is unlikely to magically go away through a simple technological miracle. Just look into the issues, in real science journals, you’ll see for yourself.

        • vectoron

          You actually had me until the line “there is not enough lithium on the planet” This is pretty much the most uneducated things you could of said.

          Lithium is actually one of the most abundant minerals on the planet, there is more than enough for billions of cars. The problem is there has never been enough demand so the actual production of it from mines is still low, but the operation can be scaled in a hurry.

          There is a good talk about solar and how it is on an exponential curve, in fact the exact same exponential curve CPU power was on. The cost to get off the grid on just solar power has literally halved in the past 20 years.

          If you are talking about peak oil you are missing the curve har har. Energy is going the same route as everything else, decentralization. This is not some far out miracle, this already happening. Everyday people are getting off the grid, if not partially, entirely. There are a variety of good TED talks on the issue, or you can just google charts on the cost/power ratios of solar power.

          Realize that the concept of a peak is not new. Peak coal was a thing, than we discovered fossil fuels. If the oil actually ran out tomorrow, there would be a sharp decrease in production, but we already have the means to produce without oil.

          • glaurent

            You’re right, lithium is indeed quite common. I had heard otherwise, but a bit of research seems to prove your point. I wonder what kind of environment impact extensive mining would have, though.

            I have no doubt that solar is following an exponential curve, but it still won’t fully replace oil before many years, if only because even if lithium is in enough supply, the current battery technologies are way below oil in terms of power storage capacity. We still have no idea on how to power a plane with significant cargo without kerosene. And again, regarding the specific case of oil, it’s not just about energy it’s also about chemicals. Although I suppose substitutes will be found eventually too.

            I’m not saying there are no solutions, just that these solutions aren’t as close as one might think looking at all projects like “solar roadways”.

          • vectoron

            Plastics can be recycled and actually use a relatively low amount of oil, but this is some what of a concern.

            Solar roadways is an interesting idea, but essentially for the cost to install solar road ways which involves digging out massive trenches and then creating all the panels we could probably get everyone off the grid by giving them a personal wind turbine. The government gave them initial funding, but they are not pursuing it any further, that’s why they went to indiegogo. If the government is not proceeding with it, it’s because it is not economical. Not to mention the tiles created now will be completely out of date in 5-10 years.

            The move to sustainable energy will not come from some massive infrastructure project, that’s an impossibility. It will come from each individual spending 10k, 5k, and eventually under 1k to install solar panels that get them off the grid. It will also catch people off guard.

          • glaurent

            I very much disagree that the move to sustainable energy will not come from a massive infrastructure project. It won’t come only from such a project, as you say individuals will have to act as well, but don’t see how we could do without such projects. If we start using hydrogen in large scale, or modifying the electric grid to handle a large amount of small sources for instance, all this will require such massive infrastructure projects.

  • PressEnterWhenReady

    I like where this article, but don’t agree with his approach; an increase in the minimum wage is like throwing fuel on a fire, just makes it burn brighter. The problem isn’t that the poor need more money, it’s that what money the poor have has to be worth more. Increasing wages increases inflation. In his example, the few successful cities are doing well because only a few cities are doing well – make it all of them and yes, the poor will make more money, but that money will be worth much less, in other worlds they’ll still be poor. The issue here is that the 1%’ers keep devaluating industry and the economy to keep their profits up, shipping $15/hour jobs to $2/hour jobs in china for example; you want to make your economy strong? Then make it strong by making it local! Increasing minimum wage is just a band-aid on a bigger problem.

    • Simpson Bart

      but ceo’s making 1000 times what workers make is good for the economy right? as long as the profit goes anywhere but into the workers pockets, it’s all good?

      • Ree

        CEO salaries need to be capped. And there needs to stop being severance packages that are in the 100 millions when these CEOs do piss poor and are laid off. CEOs are replaceable. They need to be reminded of that too. Wouldn’t it be grand if they were fired and new people were put into place at 1/10 the salary of the old one? I have watched way too many CEOs think they are entitled to eat, drink and travel(In jets or helicopters) on the company’s dollar. If those expenses were eliminated, businesses would do better.

        It is absolutely loathsome that CEOs are making that much. 100 times is reasonable. 1000 times is a sham.

        • T-Mugg

          They don’t need to be capped. We (the owners) in our lowly stock purchases and mutual fund investments need to be able to say “This guy is worth $1 million a year, not $45 million.”
          We, as owners, have very little say in compensation anymore.

          • Chardonnaysippingsocialist

            The other option is just to tax the obscenely wealthy. Wages have been taxed as high as 90% in the past in some countries. If that rate kicked in at $1million per year it would both be redistributive and have companies question the value of paying so highly.

  • Josh Roza

    I too thought I saw pitchforks someing for us, but I realized, the pitchforls are selective. Some at the top have forgotten that as part of an upperclass there is a responsibility to the community because after all humans are not a solitary species, we are a social animal. Those at the top who forget those below who worked so hard to so YOU could obtain your yatch stil require a thank you and a reasonable salary/benefits.

    We have met before, and I know that the people at aQuantive followed you, because you led them, but many of your contemporaries are nothing buck hucksters and deserve for the mob to take them away and feed them to the lions.

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  • Arta

    So, Mr.Hanauer, as a man who really knows how to find where the money is, you`re saying is that politics is the most profitable job of the future, right?…I guess that`s why you see yourself there.

    Now, I`ve seen many successful businessmen trying to get in politics, because of their success in the past. Even though It may seem to many that business and politics are pretty much the same thing, I have to tell you It`s not like that, It`s very tricky…we both know that in places where you seek power you gonna have to deal with the worst people of all, because those are the places where the dirtiest games are played and these also are the places where people don`t choose their weapon to get what they want.

    Business and diplomacy are two different things.

    From businessman, I buy clothes every month, I buy food everyday and I give 50 or more likes in facebook daily….but my Vote, i give it only once in 4 years and I sure won`t be giving it to a capitalist like you who is now trying to become even more powerful than you already are.

    What corporations are doing is not going to last because the World today is not the France of 18th century. Masses today are much more educated have bigger communication/information/organization. It may last a bit but you don`t even want to imagine what can happen if you keep pushing the people to the point where they won`t think of consequences anymore. I`m sure you`ve heard the term “social bomb”. When the society explodes together with the police and military, because they are the people.

    • Farrah Marina

      He literally said in the article he isn’t going into politics. And I quote:
      “It’s when I realized this that I decided I had to leave my insulated world of the super-rich and get involved in politics. Not directly, by running for office or becoming one of the big-money billionaires who back candidates in an election.”

      • spam 90210

        Except this letter was for sure going to become political when it backs up exactly what the Democrats are saying. So whether he uses it for political purposes for himself or someone else, this letter was for political purposes.

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  • fostr313

    To see how this works, you only have to support a local business. For example, I pay about 15% more to shop at my local hardware store over the Big Box store, but the little store hires local high school and college kids and trains them in the workforce. The little store helps sponsor the local basketball and swim teams, and the local store pays a wage that allow their workers to also be consumers. Money is like muck, its only of value when it is spread around.

  • BW

    What an awful article. You argue against a “police state” by arguing FOR your own policies to be implemented by force. All pro-keynesianism while against “econ 101″.

    • Temple Stephen Sinclair

      BW: Here’s real economics made simple for you. Capitalism is a free market system. First thing you need is a market; not a product or service, a market. Then you can begin developing products and services to sell in the market. Rule One: Never start any kind of business before you’ve done a marketing plan. What exactly is a market? A market is people and businesses that buy goods and services for use or resale. Even if for resale, the consumer is still the real market. Only an idiot would start or expand any kind of business if they had no market. In Adam Smith’s vision, the “invisible hand” of the consumer would be what decided what businesses succeeded or failed based on cost, quality, value, legality. An inferior product would become known as an inferior product. No one would buy it and the producer (business) would fail. If they produced a superior product they would prosper. Consumers have abdicated their role in discerning corporate failure or success; they have done this because they feel powerless to achieve any change. Between ad campaigns and lobbying of lawmakers, the success or failure of a company has less and less to do with the quality of their good or service. My father had a saying, “You can sell horseshit at a dollar a pound if you promote it right.”
      You wonder about achieving these ends by a police state; rules implemented by force. Is that not how things are currently done, but only for the good of the few? All the rules have been made to favor the wealthy and to curtail the rights and voices of the once middle class. Even simple things like a decent public education have come under scrutiny. Food companies do their own inspections because we no longer have sufficient funding for independent government agencies. We put immediate profit before sustainability of either the market or the source of materials. While we are dumbing down an entire nation, and making them unfit to compete in the evolving world around us, other countries are pushing to maximize their investments in education and quality control. We are in the process of destroying the market that built and sustained the US economy for centuries. The founding fathers came to the new world to escape the stagnation and cruel inequality of the monarchies of Europe. How ironic is it that the US is now in the gestation of creating a new ruling class of oligarchs, that are controlling the government and creating/changing the laws of the land. Our capitalism is dying, as did communism before it, while many of the mixed economy countries of Europe (especially northern Europe) with their socialist/capitalist blend are enjoying a much more secure, happy and prosperous lifestyle than most Americans can dream of.

    • Four

      Economics works on paper but economists never actually add in the human factor into any of their theories. Humans are selfish, greedy, frustrating, challenging, maddening, remarkable and random.

      That being said – Americans love to spend money – this is independent of wealth class. If you give Americans more money, they will spend it. It’s sad that people who gave their whole life for economic degrees and design theory completely miss this basic, simple point.

    • DiaboloMootopia .

      For Republicans, every minimum wage increase is unreasonable. And as was pointed out, every single time the minimum wage was raised conservatives promised doom and gloom that has never come to pass. At some point we cease to believe the boy who is always crying wolf.

  • peekoro

    I don’t get it. So our standard of living has increase as never before. The poor of a couple of decades ago are NOT the same as the poor of today. But because a segment of the population(super rich) has increase their standard a lot more we should throw the system out? Well nice of someone already rich to say! Yeah lets make it hard for the people of the next generation to become rich like us!

    • peekoro

      Also. The idea that we treat small/medium/large companies the same is ridiculous. The mom and pop store running on razor thin margins. Or the startup trying to get off the ground. Having them pay $15(hey why not $20 0r $30! If the reasoning applies it really shouldn’t matter HOW much we increase wages by) is NOT the same as having a successful large business increasing their minimum wage.

  • muad’dib

    This article is a lie, fake, or something. If you know anything, in 1992, the Internet was not at 300 baud. 300 baud was outdated in 1985, when 1200 and 2400 baud modems were available for the Commodore 64.

    • Four

      Actually 2400 baud was available in 1984, but lets not throw out banal objections to completely dismiss a well written article? Oh wait, you did? Effing brilliant, mate.

      I read it as he was still poor and busting his behind for the family business and all the had was 300 baud. Maybe I misread it but just because the latest and greatest tech was 2400 baud doesn’t mean people automatically had it or the infrastructure could support it. You know that by some kind of magic, that people still connected with 300 baud modems in 1992?

      • muad’dib

        My time is valuable. I look for news and information sources that are reliable. You could NOT buy a 300 baud modem for a computer in 1992 that was compatible with the Internet. They were completely unavailable. You could have gone to a thrift store and obtained a 14,4k modem for 5 to 10 dollars, or 25 dollars new, and the speed difference between a 300 baud modem and a 14.4k modem is so vast that literally, the time savings would totally justify mowing your neighbors lawn to pay for it (which is how I got my 14.4k modem). I know from experience this is a falsehood, and so my assessment is, this article is fluff. Someone making things up to embellish one point is doing that across the board. END OF LINE.

        • Four

          You would not find one year old tech in a thrift store in 1992 for dirt cheap. 14.4 modems might have been $25 in 1999, but they released for a few hundred in 1991.

          “You could NOT buy a 300 baud modem for a computer in 1992 that was compatible with the Internet.”

          This is where you are full of shit. You didn’t connect to “the Internet” in 1992, you connected to your ISP (just like today) or directly to a BBS (just like today).

          There is no such thing as “compatibility with the Internet”.

          You can still use a 300 baud modem TODAY.

          Your magical END OF LINE ran out ages ago before the Alzheimer’s set in.

    • VeteranMom

      That’s all you took away from this article? Figures.

      • muad’dib

        If this person is misrepresenting facts in one department, then misrepresenting the remainder of the facts becomes highly probable, and there’s plenty of Internet for me to read that IS factual, thanks.

        • imageWIS

          Your logical fallacy is amazing, as is the way you perform mental masturbation with yourself.

  • Matthew Reece

    If only he had stopped with, “I’m not the smartest guy you’ve ever met, or the hardest-working.” The rest of the article was just an elaborate demonstration of that statement.

  • Kevin

    I’m torn on this as a small business owner. I agree with the logic for big business, but I know a lot of small businesses that could not afford to pay $15/hr

    • supermouse35

      The point is if people are earning more, they will spend more in our businesses. That, in turn, makes it possible for us to pay our employees more. If they have to spend all of their earnings on rent and food, they can’t afford to be our customers.

      • Income and Dividend Guru

        Great idea…so if the Democrats can pass a law that makes paying less than 1 million a year the new minimum wage, then we’ll all be a nation of millionaires !! YIPEEE !!!!!!!!!

        • C.Gully

          There is a balance that needs to be struck. No one is asking for six or seven figure min wage, hell, no one is asking for much more than above poverty. If increased slowly and tied to inflation, there will be no net detriment to the economy. It can only help.

    • DiaboloMootopia .

      That is why, in Seattle, the increase is delayed for small businesses by a couple of years.

  • brendon

    I don’t think people realize how much of our tax dollars go to assisting the working poor

  • Spartican

    This brought to mind the inverse of the old saying, “If you’re so smart, why ain’t you rich?” Hanuer is so rich, why ain’t he smart? We recognize that there is unprecedented income inequality, but he blames the rich for being rich, and his prescriptive remedy is to raise the minimum wage. Ask yourself these questions:

    1) How many billionaires like him base their wealth on employees making minimum wage?
    2) How many minimum wage workers does Bill Gates, Warren Buffett, or Larry Ellison employ? How many does Hanaer employ?
    3) How does raising minimum wage improve the lot of the middle class?
    4) If raising the minimum wage to $15/hr in Seattle has been good for the economy, why not raise it to $25/hr? Why not $50/hr and then you will see the economy really take off!

    Here’s the hard part for people to get their heads around – Americans have demanded lower prices for goods. To meet demand (or avoid regulatory compliance) we have sought out lower wage countries like China for production. We have exported our middle class jobs. We buy at Wal-Mart because it is cheap, but it is all made in China. That is why there is wage stagnation – our workers are competing with workers in China, Viet Nam, Korea, India and Bangladesh. Middle class stagnation means minimum wage workers see suppressed wages.

    Here’s where Hanauer can put his money where his mouth is. Use his influence at Amazon to cease selling any product not made in the USA. Ok, how about any product not made in China? That would be a boost for American workers.

    Instead, he wants to raise the wages of employees at dry cleaners, gas stations, fast food restaurants, and hair salons, not to mention clothing stores and lawn services. A fat lot of good that will do.

    • Income and Dividend Guru

      Excellent post, Spart. Like most wealthy liberals (about 2/3rds of the Forbes 400 BTW), he doesn’t want his policies to interfere with HIS wealth, just ours.

  • http://www.propertarianism.com Curt Doolittle

    HE gets it sentimentally, he doesn’t get it economically, or institutionally, because he’s not knowledgeable enough to ‘get it’ economically or institutionally. But the fact that he expresses his ideas sentimentally, is more USEFUL than expressing them economically or institutionally.

    The problem with redistribution is giving everyone the right incentives, rather than the expansino of the government, which is a parasite on consumers and producers alike.

    The economically sound, and institutionally safe method of accomplishing this redistribution is to (a) redistribute money directly from the treasury to consumers (b) base it on sales taxes, and eliminate as much of the income tax structure as possible, and (c) construct it as a commission that the more people, the less there is to go around (d) give it to everyone. (e) remove all employment laws, minimum wage laws and the like (f) make it as much as we can tolerate. (f) eliminate all other redistributive and controlling government programs and organizations. (g) Direct treasuring lending of all single home mortgages, and single owner business properties at zero interest rate over 15 years.

    Why? Because this solution (1) makes employment a preference not a necessity, and therefore not subject to regulation (2) encourages everyone to limit the scope of government and maximize personal take home (3) doesn’t interfere with the pricing structure by artificially pricing labor and distorting american products and services. The importance of this point is greater than the importance of the first two. (4) would force the population to resist all immigration other than that which increases productivity. (5) eliminates the class warfare. (6) most importantly, it eliminates the majority of the financial sector, by causing the banks to compete for consumer savings, rather than construct predatory consumer credit schemes.

    I wish I had time to give this the treatment it’s worthy of, but it will have to do for now.

    Curt Doolittle
    The Propertarian Institute
    Kiev Ukraine

    • blurider

      When you use that well worn term ‘redistribution’, would you be referring to the ‘redistribution’ which occurs when unions are demonized and/or disabled by fiat, when the AMA din league with medical schools decide how many doctors we need, when trade agreements destroy one sector of a small country’s economy (or a large country’s) at the expense of another? swhen the people who raise the children and educate them to be workers, the poets artists and musicians are valued nearly as much as the masters of the universe who really produce nothing and are often rewarded more when they do less?
      Do you mean upward ‘wealth redistribution’ or downward ‘wealth redistribution’.

      Did you miss this ‘real world’ example? – “So forget all that rhetoric about how America is great because of people
      like you and me and Steve Jobs. You know the truth even if you won’t
      admit it: If any of us had been born in Somalia or the Congo, all we’d
      be is some guy standing barefoot next to a dirt road selling fruit. It’s
      not that Somalia and Congo don’t have good entrepreneurs. It’s just
      that the best ones are selling their wares off crates by the side of the
      road because that’s all their customers can afford.”
      OR this? – “Well, trickle-downers, look at the data here: The two cities in the
      nation with the highest rate of job growth by small businesses are San Francisco and Seattle. Guess which cities have the highest minimum wage? San Francisco and Seattle. The fastest-growing
      big city in America? Seattle. Fifteen dollars isn’t a risky untried
      policy for us. It’s doubling down on the strategy that’s already
      allowing our city to kick your city’s ass.”

      You speak as though you’re desperately clinging to the belief that naturally endowed, super efficient economies are managed from a temple on top of a mountain – by the kind of gods you aspire to be..and they will always work to the benefit of society if those gods are merely allowed to do their work unhampered by ‘the help’.
      Like everyone knows that people are by nature, shiftless and lazy unless incentive is doled out to them by all seeing all knowing gods – people like you – who really, really understand ‘work’ and the real values of production.(and all about human nature, of course)
      Sorry man, you’re obviously intelligent but you won’t ‘get it’ until you break out of your own box and shed your own stereotypes and authoritative judgment.
      Since you are an intelligent man you’d know exactly what I meant if I said that you sound like you’re desperately defending the status quo.

      Like the gods on that mountain the logical, intelligent economy is a myth!

      • JKH

        So how can we curb expansion while we raise minimum wage (which I support), when expansion is so destructive for the environment and for our way of life?

      • http://www.propertarianism.com Curt Doolittle

        Despite the fact that your response is emotive nonsense, I’m actually going to waste a little of my time and address it.

        1) When I use the term “redistribution” I use in in the academic sense, where we refer to the collection of taxes, and the redistribution of taxes as benefits.

        As you have implied, there are many ANALOGIES to redistribution, but no other forms of redistribution. These analogies vary in how they are conducted, such as when we use the government to create artificial scarcities of labor, like labor unions that are given legal protection by collective bargaining laws, and where businesses are prohibited from terminating striking employees. Or, as you mentioned, when the government allows a union (the AMA) to artificially constrain employment. In both these cases the government is used to prevent people from working as a means of artificially inflating wages.

        So, unions, for low value labor, and the AMA, for high value labor, both create artificial scarcities to increase market prices for labor of their memberships. Just as Guilds in the past, and all licensing schemes in the present, artificially limit the supply of labor.

        The most effective way we know of is to require individuals to obtain insurance that they will perform competently, rather than limit the pool of labor by law. Insurers will not protect workers with poor work habits, nor doctors with poor work habits. This technique artificially limits the labor pool and inflates wages, but at the same time improves quality of goods and services.

        —“If any of us had been born in Somalia or the Congo, all we’d be is some guy standing barefoot next to a dirt road selling fruit. “—

        Actually it doesn’t work that way. If you put 100 english speaking northern european males on an island, they would rapidly organize successfully. Many other cultures do not. If you put 100 individuals with 140IQ+ on an island, even better things will happen. I was born into an ancient family, but not under good conditions. I would succeed anywhere and everywhere you put me. It is in my nature. And given that the nature/nurture debate is over, and that it’s 80% nature, it looks like your argument is patently false. Now, it matters that the IQ in that part of the world is a full standard deviation or more below this part of the world, and that IQ pretty much determines economic velocity. Especially verbal IQ. Because it improves one’s ability to negotiate creative solutions.

        Now, that aside, your argument is an alternative play on the Rawlsian fallacy of the veil of ignorance. And while it is a nice thought experiment, what it does is ignore the fact that we are kinship driven species, and we must be or we will fail to survive. W.E.I.R.D. countries alone have, because of their odd adoption of a new age christian heresy we call secular humanism, adopted suicidal ideologies, but the rest of the world has not, and considers WEIRD countries antithetical to human experience.

        So your argument is one in favor of fratricide.

        —“You speak as though you’re desperately clinging to the belief that naturally endowed, super efficient economies are managed from a temple on top of a mountain – by gods (like you aspire to be?)”—

        I speak as a highly informed individual, and possibly one of the best informed, as to the causes and consequences of economic velocity resulting from formal and informal institutions. And my argument, and that of a not inconsiderable number of us, is that since pareto distributions of property are universal to all cultures, and since the ‘smart fraction’ starts at about 106IQ, at which point individuals can both repair machines, and articulate their thoughts without assistance, and since morality decreases rapidly below 100IQ, that a polity must reach a level where the distribution of property used in the voluntary organization of production is under the purvey of that smart fraction. The more the better. Now, diversity decreases trust and homogeneity increases trust, and trust reduces transaction costs, and therefore determines economic velocity (all other things being equal). Trust had to evolve in the west due to historical reasons unique to the military strategy of northern indo europeans. It was institutionalized in land allocation practices. And was expanded forcibly by the church, and forcibly by Anglos under the common law, who carried that methodology into modernity.

        So rather than say that such things are run from ivory towers, they are however, highly dependent upon everything from genetic distributions, to norms to myths and traditions, to metaphysical assumptions. (All of which I can easily enumerate but won’t for sake of brevity here.)

        So if you want to levy a material criticism then you are welcome to, but since I am sure I know most of the thought leaders in the world and their various positions, I kind of doubt that you’ll be able find some alternative.

        The argument I presented in the original comment was in fact, the only rational and empirical (ie: calculable ) strategy I know of for providing the populace with the incentives necessary to preserve our material advantage and therefore standard of living. No other solution that I know of (and I am fairly sure I know of all currently put forward) meets equal criteria.

        Cheers

        • ropo1

          Oh now I understand… you’re a racist.

    • DiaboloMootopia .

      Why don’t Tea Party types like you understand that the choice is not between no-regulations, social Darwinist capitalism, and socialism/Marxism? The point of this article was about saving capitalism. It’s also incredibly obvious that you like sales taxes because it puts most of the burden on the poor.

      It is a debate that has nothing to do with socialism. This constant cry “socialism! socialism!” as a replacement for debate is profoundly unAmerican.

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  • Michael Ambrosia

    I appreciate Mr. Hanauer’s sentiment here, but not sure if the logic works out as well as he says it does. First of all, it sounds like this is coming from a person who inherited a fortune, not built a business from the ground up with his own sweat and tears…I would like to also hear the perspective of one of those sacrificial, hard-working guys. Secondly, this minimum wage solution tends to work in his favor, given the alternative: taxing the upper class and closing tax loop-holes. Raising the minimum wage won’t harm business for corperations like Walmart, but it just might put thousands of small businesses under, who are barely making it, as it is. Then the goods that are sold on that level (to the poor and middle class) will go up in price. So what ends up happening is you are not just taking money away from the corperations, but the middle class as well, and then giving it to the poor, raising their earnings equivilant to that of those who have paid for college or trade school. So you are essentially shifting the burden of the poor on the middle class rather than the rich. I do agree that this solution will keep the pitchforks in the sheds, and keep Mr. Hanauer in the lifestyle he inherited, but certainly not at any expense to himself. I’m not saying there is another simple solution we should go with, but somehow we need to create opportunity and reward hard work. It seems the more we try to create fairness and equality, the less fair and equal the outcome. I think the best thing Mr. Hanauer can do with his money is not put it away, but get connected with potential entreprenuers like myself, invest in the hard-working middle class, who will, in turn, hire workers. The drag on this economy (apart from free medical care for those who don’t take care of themselves) is not those who are earning low wages, but those who don’t want to work at all.

    • DiaboloMootopia .

      The US has relatively low social mobility because it has stopped trying to create fairness. The higher social mobility in Germany and Denmark shows that liberals were right all along and this makes Republicans’ blood boil.

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  • HeatFan786

    I read an article once regarding “income inequality.” “Experts” were asked about the situation and what they would do. It literally led to a polarized debate where some people say it would be impossible to revamp a system. Sounds like people are just giving up hope and being lazy. We all need to do our parts to combat crony capitalism.

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  • Hartmut Ruppel

    He is rightly scared. And so should all of us be. Only, his medicine of sharing a bit of his wealth to elevate the poor to the ranks of a spendthrift middle class, to drive even more consumption, more markets, more of more all round, cannot redeem us: tweaking or managing capitalism in such manifestly self serving fashion skirts, as it sadly does, the more fundamental challenges of our time, our ways and values, the illusion or assumption of eternal growth, the ruthless exploitation of natural resources and the wholesale abuse of the environment, the grinding poverty and all that this holds in its wake – for humanity today and the destiny of the planet we inhabit.

  • Lee A. Paquet

    The North-west oil boom in North Dakota is forcing Wal-Mart to pay $17 an hour. I don’t hear any stories of WM being forced out of business there!!!

    • Income and Dividend Guru

      That’s because that’s the fair, market wage.

  • Trixta

    and believe me, we are coming.

  • Kathy

    Rich people are broke at a higher level is all. People like Warren Buffet and Bill Gates know how to throw their money around and stay ahead of the game. If I could get out of debit and have a 3 bedroom 2 bath plain simple house and a car all paid for, I would be happy with that – living just a plain simple life!

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  • iamwinstonsmith

    Why are we always blaming the 0.01% for being successful?

    Has anyone ever bothered to consider the possibility that the 99.99% is doing incrementally worse because they are becoming incrementally more lazy, less educated, less motivated, and more attached to their video games and mindless Internet browsing?

    • DiaboloMootopia .

      Yes, we have. That idea is so obviously bullshit, that it did not require very much consideration.

  • Jim

    As long as he founded a nightclub, he should know it’s one word.

  • Marina T

    We have too many businesses starting on a shoestring and running on fumes. Raising of minimum wage would be great if we (business owners) had access to flex our operating funds.

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  • exsanguine

    Compares the non-raising of the minimum wage to the ever rising salaries of CEO’s and upper management. Strawman. They did that because they could and face no repercussions. No one seems to want to ask why employees would need more per hour. Maybe it has to do with being taxed and fee’d to death by uncle sugar and your localities. yet you want to raise the wage and thus the cost of goods which negates your entire brand spanking new ‘living wage.’

    This is the hard truth for this “sad rich person” that he and none of the other libtard 0.01%ers cannot realized or refuse to.

    The Stupid. It Burns™

    • Income and Dividend Guru

      Most of those raises are excessive, but it’s paid for by PRIVATE shareholders.

      You want wages raised by government officials with the costs borne by PRIVATE owners of small businesses.

  • Jim_Bowes

    It’s nice to hear a successful person is thinking beyond his own pocketbook. I live in the Netherlands where socialism seems to work pretty well. Distributing the wealth makes sure that everyone has dignity but better yet makes it possible for me to walk through my city, feel safe and not be hit up on every corner for a “cup of coffee”.
    Many of the friends I grew up with would say that the rich deserve every penny they earn and they do but how much wealth does one need to accumulate? I love the USA though my friends think I am only blasting it. No, I am only sad to see it becoming a third world. I am sad to see it in such a state of disrepair and I can’t stand seeing desperation that I just do not see in other countries.
    Socialism is not perfect either but there are some advantages. Our greatest institutions are social; public schools, the police and fire departments, libraries. I do think that we are out of balance and that is something that needs to be discussed in an open and respectful way.
    Thank you for sharing your thoughts as someone who I guess you could say would have a lot to lose if taxes for the rich were raised or wealth was distributed better. It’s nice to know that it is not just the middle class who feel this way.

    • Pearl

      A very good point about being able to walk around without being accosted. From the outside, Hurricane Katrina showcased a country that had completely lost the ability to pitch in together. Australians still can but now we have a government that wants to replicate all that is worst about the U.S. We don’t have a poor underclass and we generally feel safe out and about. That’s all about to change.

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  • craig

    Better to create a labor shortage. Stop immigration, tax outsourcing, tariff imports. This way the value of the American worker jumps up and forcing minimum wages on employers is unneeded. Besides that’s a great way to raise unemployment.

  • http://www.kareldonk.com/ Karel Donk

    I would have hoped that Hanauer’s motivations for wanting change would have been a little purer. Like being motivated by love instead of fear; love for his fellow human beings, and the realization that the way he and his fellow billionaires are exploiting the 99.99 percent of humankind is barbaric and cruel. On the contrary what I get from Hanauer’s article is that he would have been just as content as his “fellow filthy rich” with exploiting the 99.99 percent of the population if he could continue to get away with it. But he’s beginning to realize that the masses are waking up and are not going to tolerate being exploited like this much longer.
    And I’ve got bad news for Hanauer: it’s not just that citizens are starting to believe that capitalism itself is the problem; the problem Hanauer and his “fellow filthy rich” are going to have to deal with in the near future is much worse than that. Citizens everywhere around the world are starting to realize exactly how they’re being enslaved by a small group of bankers who have set up a system of control and enslavement via the monetary system, of which their enslavement via income taxation is only a small part.
    Read the details here: http://blog.kareldonk.com/rick-hanauer-youre-missing-the-point-on-inequality/

  • T-Mugg

    There are a couple of problems that I see.
    1) Who voted for CEo’s to make 500x more than the average worker? The CEO’s did. The owners of the companies (us shareholders) did not have a sufficient say in the matter.
    2) People are getting poorer because we comfort them. Today’s poor families have the best groceries, the latest gaming system, and fewer worries than most who pay for their own healthcare, groceries, etc.
    3) Higher taxes are not the solution. This money increases the dependent class, and allows them to spend more (not keep more) to support these wealthy CEO’s.

    I welcome adjustments to employee pay, but let’s stop taxing everything. This does not solve our inequality problem. It simply allows those who have accumulated wealth to skate by while those of us who are working hard will suffer.

    This is a moral problem. Any employer who has the power to pay $20/hr for ultra loyal employees and make a comfortable living, but decides to pay $7.25 is evil. We cannot legislate morals.
    However, the worst thing that we can do is to tax them and allow our politicians to become more rich and more powerful. Our politicians will take what they can get, give the rest to their friends, and then send the leftovers to their constituents in order to keep them voting for them.

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  • Income and Dividend Guru

    Economic nonsense. If this guy thinks government mandated wages lead to prosperity, then let Seattle raise the minimum wage to $50/hour, which is about $100,000 a year.

    Let’s see how much a Starbucks Latte costs then.

    I would also be interested in seeing if this guy and the Starbucks officers favor a tax on coffee and other products that enabled them to create THEIR wealth.

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  • Kirk Price
  • desucca

    The big question is who can afford a pitchfork at today’s prices?

    • Marius Budu

      Only if Wall Mart has a sale…

  • http://musingmarc.blogspot.com IDisposable

    I agree with much of this article, but when you start suggesting that coercive government action is needed to force you 0.01% ers to do the right thing is where you lose me. You see pitchforks coming, you are scared, now you want government to do something you can do for yourself. If YOU want the companies you own to act as better stewards of the public’s good, make them.

    Oh, by all means cite “Speed Limit” signs as an example of the government trying to force people to “do the right thing”. We’ll all just laugh while we all blow past them at 15+ over and hope we don’t get caught, because unlike YOU, we can’t afford to buy our way out of those regulations. It’s really a perfect predictor of forced minimum wage’s effectiveness.

  • Joseph Bod

    The core argument against minimum wage is that market wages reflect what workers are worth.  Therefore, if wages are forced up, prices will rise and some workers will be fired because employers won’t pay them more than they’re worth. But this is true only in a perfectly competitive market where employers are infinitesimally small, where companies make zero profits and everyone who wants to work is able to find work. Here’s why, from an economist. Prices are determined by supply and demand, not cost of labor.  If wages and other input costs are greater than the price that demand supports, then employers lose money.  If costs are lower, employers divide the difference between investors and workers.  The split depends on their relative bargaining power. High power workers, such as professionals, get paid at or close to their marginal productivity. That’s why execs can get paid so much more than seems “fair” in terms of level of effort.  If a CEO makes a company look $1 million more valuable, then he’s worth paying $999,999 for, even if he just plays golf all the time.   And he can get that million dollar level of compensation because he can walk away and deprive the employer of his added perceived value. Minimum wage workers, on the other hand, are in excess supply in markets where the minimum wage is active.  If they turn down a job, there are others to replace them.  And they can’t afford to say no, anyway, because welfare and unemployment benefits have been cut back.  So employers pay minimum wage workers the legal minimum regardless of the value the workers add, and the investors get to keep all of the profit, which is the difference between input costs and the after-tax prices market demand supports. Therefore, in a free market, minimum wage workers are paid less than they’re worth, while employers are still free not to hire anyone whose marginal productivity is worth less than the minimum wage. No one gets paid more than their worth under minimum wage laws. So if minimum wage increases, the investor share of the profit decreases, but not the price. Prices don’t — and in a free market, can’t — rise until the investors run out of profit to share. Last I checked, Walmart and McDonald’s aren’t quite at that point, yet.  So, I’m not saying it’s good or bad, but that’s why raising the minimum wage won’t (and historically, doesn’t) increase prices and decrease employment, and it doesn’t make anyone pay employees more than they’re worth.

  • afterthefact
  • http://40albumsfrom2012.tumblr.com/ NODHNL

    wow, I have been saying this stuff for years now, I am glad someone is likeminded at the top! maybe my ideas spread out through social media more than I realize. or we read the same books in college. who knows? what I do know is that this article is spot on. capitalism doesn’t work when people put all their money into savings and don’t re-invest into the system itself. making money on money just pulls capitalism apart. and the main point is that the rich don’t create jobs, consumers with disposable income create jobs. it is so obvious that it is hiding in plain sight.

  • slsdlksfj

    Lol, Hanauer trying to act like a self made man is just one of the many pieces of bullshit in this article. “What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future.” Yeah, that and the fact that your parents owned the biggest bedding company and fifth biggest textile company in the US. It’s pretty easy to tolerate risk when it’s your parents millions you’re gambling with. I wonder how much money he flushed down the toilet in his brilliant “investments” before he stumbled upon someone else’s great idea, Amazon.

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  • Dan

    The problem is “accidental billionaires” who have never built anything themselves and don’t understand the value of money as incentive.

  • roggy65

    “Yet no company I know of has eliminated its senior managers, or outsourced them to China or automated their jobs. Instead, we now have more CEOs and senior executives than ever before. So, too, for financial services workers and technology workers. These folks earn multiples of the median wage, yet we somehow have more and more of them.”

    This person is totally clueless to how a major corporation works in regards to the actual workers. The executive level does continue to grow, but the peons, the technology workers, are replaced with lower cost offshores resources. 5 years ago there were 150 technology workers in the department, we’re down to 30 with 70 offshore resources. Earn multiples of the median wage??!!! Really? What dark place you pull that fact out of?

  • carl harris

    The basis of setting out your market stall has been taken to the extreme. But human beings will only progress not regress it is in our Dna.

  • Democratus

    They’re trickling down just enough to keep the pitchforks at bay. Pitchforks are an interesting allusion to civil strife but also Hell!

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  • 1jmk1

    Trickle down was a concept drilled into your average American in public school to make it seen like govt’ subsidies, tax breaks and other grants were “OK” for the elite because the money would trickle back “down” to them.

    Even at the time when I was in 7th grade I knew for whatever reason people don’t spend and part with money that easily and most of the it would never see the middle class.

    Just like the 2008 bailout….that didn’t trickle down but stayed with the companies that were bailout.

    In the meantime, American’s are/were struggling and the amount of stimulus they gave the banks and automakers would of worked out to the effect of $33K that could of been sent to each tax payer (after all it is there money) to clean up the books.

    Instead, companies used it is an excuse to crush wages, shed works and simply kept the money for themselves.

    This guy actually gets it.

    Not to mention the richest people I personally know don’t buy squat with their money…they save it. Therefore it never trickles down.

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  • Jack

    I agree with much of what this article is saying, but one large objection comes to mind. We live in an age of technology, where automation and computerized programs are becoming increasingly widespread and affordable. Much of this new technology is geared toward facilitating or replacing altogether the type of work that minimum wage workers provide, large scale production and distribution. Whether it’s a self-checkout counter at Wal-Mart or a machine that builds pillows like those sold in the authors’ company, many companies are finding that human labor is increasingly costly and inefficient. Will paying people more money allow them to spend more? Absolutely. But I am not sold on the idea that increased minimum wage, regulated at the federal or even state level, is a healthy thing for all industries across the board. Money finds a way to keep money, so what is to stop large companies from automating the work that they don’t want to pay laborers $15 an hour to do?

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  • Mike Coster

    Its a free market. Nick, crank up the pay for your employees and insist on it for the businesses in which you hold investments. Let others decide for themselves. Talking is not leading: if you believe this, take action. Don’t beg for government intervention in the market so you are “safe” in the crowd.

    • http://oceanoxia.wordpress.com/ alteredstory

      As with taxes, things like this don’t have a nation-wide impact if they’re voluntary. This sort of thing is WHY we have a government to begin with – to give the majority a way to protect themselves against the more powerful minority without resorting to violence.

  • Sang_froid

    This has changed my idea which has been contrary to his, but still doesn’t answer the question – As businesses raise minimum wages, won’t they have to raise prices to cover increased costs? Where does this spiral of rising incomes – rising prices end and how does it affect those below the middle classes?

    • http://oceanoxia.wordpress.com/ alteredstory

      Even if 100% of the raise is passed on to the consumer, it won’t actually make much of a difference in the cost – a McDonald’s burger MIGHT cost five cents more.

      But at the same time, people for whom a few cents cost increase might matter will be making much MORE per hour. It’s the Henry Ford principle – pay your workers enough to afford your product, and you get a broader customer base.

      At the same time, the people making more per hour will be able to spend more money, which will help OTHER businesses, which will ALSO pay their workers more per hour, and so on.

      As to the spiral you’re worried about, evidence suggests that prices are not rising because of rising wages – wages have remained stagnant for some time now. For people below the middle classes, the biggest costs are rent, healthcare, and education, and those have been growing FASTER than inflation, even as wages have remained stagnant. In other words, a higher minimum wage will only help those at the bottom.

  • laura

    Amazing,Hanauer gives so many good, logical arguments for why raising the minimum wage is more than just social justice–its economics 101. And yet people continue to try to delude the public, the voters and themselves into believing that starving the worker is the only way to ensure employment. We have a country full of working poor. One guys writes that Hanauer has it wrong because he doesn’t understand “incentives”. What incentive is there in continuing to work like a dog and barely being able to survive? That would incentivize a lot of people to give up and earn money in alternative (i.e. illegal) ways. If CEOs need to be paid 1000 times more than the average worker so they will be “incentivized” to stay and not take their companies and jobs abroad, why is the average worker not incentivized by higher wages? It’s time that smart thinking politicians on both sides called people out and stopped allowing greed and selfishness and a complete lack of social consciousness to masquerade as as some kind conservative economic “theory”.

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  • http://www.mikeechlin.com/ mechlin

    This is probably the most important article I’ve read in years. Schools need to be dedicated to solve this enormous, apocalyptic problem.

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  • Glenn Etchison

    I don’t recall where I first heard this idea, but it may have some merit. Perhaps some rebel economist can run some numbers. What would happen if instead of increasing the minimum wage, we instated a maximum compensation rule as some function of the median and/or mean wage of those employed (regardless of the country in which they were employed.) Enforce the maximum wage with punitive taxes that approach 100% as the multiplier gets higher. If the decision maker wants to make more money, he just has to figure out how to pay his employees more.

  • uheyho

    This guy is an idiot. Ignoring the fact that all of the fundraisers (selling gov favorites) and illegal immigrants and unneeded h1b workers has stopped wages from increasing more than anything he mentions. He is also lying about how he saw the future of the internet. I know by his description he has internet history wrong. He saw some go getters (Bezos…) that he knew would be successful and invested money his family earned and won big. His Aquantive company was a sham, but stupid microsoft did buy it and then wrote it off. He just wants insulation from his greed because he does not know how to create anything. No one is forced to work a MickeyD’s why doesn’t he start his own Living Wage burgers and beat MickeyD’s since he said workers will create better product and be happier. What, no, that’s what I thought. He is a parasite, lucky and cannot create anything but doesn’t want a pitchfork with his name on it.

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