The Rich: Why We Need Them

I enjoy when people say we should try to "soak the rich" and try to extract money from them since they have so much. People forget that the only way people get rich in this lifetime is by creating value. The only way you can create value is by building companies that provide products and services that people like. The only way to build these companies is by hiring employees.

Looking at the 2010 Forbes 400 list and seeing who the richest people are it seems evident that these uber rich people have to hire people if they want to create more value.

1. Bill Gates- Microsoft (89,000 employees)
2. Warren Buffett-Berkshire Hathaway (260,519 employees)
3. Larry Ellison (108,429 employees)
4. Christy Walton (Wal-Mart 2.1 million employees)
5. Charles Koch (70,000 employees)
5. David Koch
7. Jim Walton
8. Alice Walton
9. S. Robson Walton
11. Sergey Brin and Larry Page (24,000 employees)

(Note I didn't include Bloomberg number 10 because it’s hard to figure out exactly how many employees Bloomberg has because they have so many subsidiaries)

The richest people in America create over 2.6 million jobs. If you think about it for a moment though it would make sense that some of the wealthiest people in society would have to manage large organizations. Companies can only grow if they hire employees that add value. CEOs and executives of large companies are compensated so well because they are overseeing tens of thousands of employees. Managing means more responsibilities means longer hours which means more stress and misery for executives and CEOs. Businesses create more employment than any government agency could dream of. A capitalist creates a job for someone who didn't have a job. I have yet to see a poor person give a rich person a job or even a middle class person a job.

People might argue that the rich people really don't create jobs and just count their money. The only way people can continue to be rich is by investing their money in productive assets (stocks, bonds, real estate) or working. Investing money in a company gives that capital which allows them to build more factories, buy more equipment, and or hire more people. In addition to this the rich also do spend money (in fact some rich people spend so much money they end up being broke). According to Moody's, the top 5% of income earners account make up 37% of all consumer spending. If 70% of GDP is based off spending then in theory close to 24% of the GDP comes from the top 5% of income earners. Note to be in the top 5% one would have to earn a little over $160,000. If not only are these super rich people creating jobs they are also spending money! Also an important point to consider is that the richest people pay the most taxes. According to the Tax Foundation, the top 1% of income earners in 2008 paid 38 percent of all federal income taxes. The top 1% paid more in federal income taxes then the bottom 95%.

The rich are not only creating companies that make products that people enjoy, but employing many people to help create that product or service people want or need. In addition to all of this the rich are paying a large share of taxes. To say we don't need the rich is just utter nonsense. The top 5% of income earners earned close to 35% of the nation’s adjusted gross income yet paid close to 59% in federal individual income taxes. Clearly, the rich are a net benefit to a government that wants to continue to spend money.