Saturday, March 12, 2011

The myth of wealth creation.


The myth of wealth creation.

Despite the mantra that wealthy people create jobs this is not really the case.

Job creators/wealth creators are more often entrepreneurs who created the business and the jobs first and then became wealthy.

The most wealthy people in NZ at present became wealthy by destruction.

Asset stripping, closing businesses and removing capital so they can invest it in much more lucrative financial juggling.
Taxing these sorts of activities more with FTT’s, capital flow restrictions and CGT’s would be a huge benefit to the economy.

The advocates of Neo-liberalism, deregulation and taxing the wealthy less reckoned they would then invest more money into productive business and employment. In fact investment in business dropped 2/3 since 1980, many successful businesses were closed down for short term capital gain and employment in manufacturing and value added exports plummeted.

If the Government was serious about stimulating the economy they would have increased benefits and the minimum wage instead of borrowing to cut taxes to people who mostly spend overseas in luxury goods or paying of loans.

Businesses are shooting themselves in the foot by advocating that their customers be paid less.

People with gumption are leaving the country because there is not enough spare cash in wages and benefits after paying for essentials to buy products from a new business. (That is if their measly wages allow enough earnings to leverage into starting a business and they can get capital from a finance system that earns more in gambling than business investment)

As I can tell you from personal experience there is no point starting new business in a low wage country that cannot afford anything beyond necessities.
Skilled and talented employees are leaving because employers are allowed to use immigration, subsidies like WFF and union busting rules to pay less than the job is worth.  Potential Entrepreneurs  have no spare cash to leverage their own business, even if the demand was there..

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