Quora Answer: Do the Rich Really Create Jobs?

The following is my answer to a Quora question: “Do the rich really create jobs?”

A wealthy person incidentally creates jobs through consumer spending, or through investing in business.  But a person who is wealthy by virtue of inheritance, or family, through pure investment in financial instruments or existing businesses with no meaningful growth, has minimal impact in job creation.  However, we have to consider that people look to acquire wealth.  Any job creation is incidental, because there is some monetary gain eventually, or in the case of consumer spending, there is something else to be gained.  Simply having more money does not oblige a person to distribute it to the community.  That is why we have tax policy.

The purpose of taxation is for the state to acquire revenue to run the various government departments and organs of state and their programmes, and in that process, create jobs to generate economic growth.  A single wealthy person, no matter his wealth, does not have that ability.  The government’s purpose is not to directly redistribute wealth, since that disincentivises innovation and growth.  This affects job creation.  Rather, by shaping the investment environment, it stimulates growth, and that creates jobs.

It is also government’s responsibility to project the sets of skills required and to ensure that the next generation are given opportunities to acquire those skills, so that jobs stay in country.  By offering tax breaks for donations to the arts and other avenues, wealthy people bequeath to museums, hospitals and parks.  It is transactional.  The average person is not suddenly going to give back.  The instinct is to keep it within the family.

In summary, wealthy people alone do not directly create jobs.  Wealth creation creates opportunities.  By shaping policy, jobs are created.  At its essence, people are motivated by self-interest, not altruism.  For jobs to be created by the wealthy, it must be made to be in their interest to do so through policy, and education.