Entrepreneurs are not Job Creators.

Entrepreneurs are not Job Creators.

America has needed to create its own myths in order to make itself a people.  While nations like the UK have tales of King Arthur and the Vikings their sagas, tales which predate the modern nation-state, we had to invent our myths in plain view.  Thus, we know that it was the well-meaning Parson Weems who made up the story of George Washington and the cherry tree.  And another myth, that “we” never lost a war – at least up till Vietnam, seems to have just happened. 

It was Puritan John Winthrop who said their new colony would be a “city upon a hill,” that would draw the attention of the world.   This eventually became a “shining city upon a hill,” and has been used to describe American exceptionalism by folks as varied as John Kennedy and Ronald Reagan.

Sometimes, the myth is harmless, as it is with George Washington and the cherry tree.  In other cases, the myth is delusional and leads to bad policy.  American exceptionalism is just such a dangerous myth.  Sure, we have been a genuine refuge for folks fleeing oppression, but we also have propped up many terrible rulers.  If you were born in the Soviet Union, or communist Poland, the US was your dream.  But if you lived in Central American and were concerned about the plight of the poor, the US was out to get you.  It worked the same way in the Middle East.  Yet even after disastrous wars in Iraq and Afghanistan, many commentators continue to believe that the US must be involved.  Why?  Our foreign entanglements have only led us to betray the better side of our nature.  What we really need is to stay out of the fray for maybe 20 years. 

And yes, I mean that.  Even about the mess in Syria.  If we can extract a peace deal, fine.  But if we can’t, beyond protecting our allies (Turkey, Israel and Jordan) let’s stop the madness.  Even if that makes the Saudis even angrier.  Who cares!  The Saudi’s are a prime supporter of Middle Eastern terrorism, and are themselves just waiting for a fall. 

The myth that bothers me today is that which inflates the value of entrepreneurs.  Sure, they are gutsy folks; but we have overestimated their value.  They are out for themselves, out for the big score.  And rather than creating jobs, they destroy them.

Think of Amazon.  They destroyed the book industry, both the bookstores and the publishing industry itself.  Before Amazon and the Kindle, publishers were able to maintain a stable of writers over decades, with the big successes paying for the writers who might take years to complete a difficult and less commercial work.  And as for bookstores, the bookstores of old were communities of readers – with some of them paid for their knowledge.  The employees were often experts, both able to recommend a new book, and able to find the last copy of a book for an eager buyer. 

Amazon has also taken much of the profit out of specialty retail.  Whether it is a fancy plumbing fixture or an expensive camera, you can get it today at Amazon. 

The many jobs that bookstores provided, or that were available in specialty shops have largely disappeared, replaced by warehouse workers who toil for Amazon under terrible conditions (if the reports are true).   So the net result is fewer jobs and shittier ones.

And there is really nothing special about Amazon.  Many retailers were going on line at almost the same.  And for a while, it seemed like Ebay would be the winner.  We spent the 1990s building the fiber optic network that would make internet retail practical.  And then the US Supreme Court ruled that states could not collect sales taxes if the seller did not maintain a physical presence in the state.  So Amazon was off and running.  Yes successful, but not a great idea, just the right idea at the right time.  ... Steel was a great idea!  As was vulcanized rubber.  So were records (recorded sound).  But Internet retail.  Sorry, it was inevitable.

And what about Walmart?  Walmart was a great idea for the Waltons.  It took advantage of the suburban development that followed the interstate highway system, establishing newer and bigger stores that had many advantages over the old downtown merchants, and to top it off, their property taxes were lower too, since they were largely out of town.  As Walmarts proliferated, rural downtowns were destroyed.  Walmart was not alone, and all the big box mall stores played a part in the destruction of the old downtowns.  But then as Walmart gained power, it began to use it to force American manufacturers to move offshore. 

And all of this funded by land that was opened up with our tax dollars.   And sometimes communities are bullied into giving Walmart (or another big box retailer) tax breaks.  Sometimes the entire development deal is funded by the sales taxes that should go to support the town.  So towns pay for their own destructions.

Not all entrepreneurs have destroyed jobs.  But the general trend is for efficiency to yield fewer, not more jobs.  Even something as odd as the iPod wreaked havoc with the music industry, destroying the record business, and the music business at the same time. 

I am not a Luddite.  But while change is inevitable, let’s at least recognize that the folks leading the charge did not have more than business savvy.  And from a policy perspective let’s also recognize that the entrepreneurs often relied on the law and existing infrastructure for their success.  Thus, Microsoft and Apple needed patent protection to get as far as they did.  And the Internet as a whole depends on communications monopolies.

So, perhaps it is time to levy taxes to reduce the advantages that out of town merchants have over those in town.  We could do this be making larger tax districts.  And as for business that takes place over the internet, perhaps we need to levy a tax on the gross business that is conducted on line.

And when a figure like Mark Zuckerberg stands with Governor Christie and Mayor Corey Booker and pronounces his judgment regarding their fitness to use his gift of $100 Million (for education in Newark), maybe we need to take a step back, and ask ourselves who is Mark Zukerberg anyway.