Nick Hanauer, a very successful venture capitalist, has a must read OpEd in Bloomberg News. In it he explains the very fundamentals of economics:

I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.

Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush- era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.

Constantly we hear Republicans and blue dog Democrats saying that taxing the 1% more will mean that they can’t hire. Their rationale is that if the “job creators” have more money then they will hire more people — a notion that would be comical if it their belief in it wasn’t so scary.

A perfect example of this is John Boehner. For over a year we have heard him repeat this over and over again. It was the core reasoning he gave for extending the Bush tax cuts to the top 1%. Forget the fact that companies are sitting on record piles of cash right now and the economy collapsed with these tax cuts in place. Instead Boehner entered the alternative reality where you can just make shit up.

Now reality is catching up to Mr. Boehner. Yesterday he proclaimed that he is “not an economist” and all the real economists echoed a sigh of relief at that admission.

But you know what? I’m not an economist either. What I am is a high school graduate and I remember learning early on in my high school years the simple way supply and demand works. People go out and buy stuff, meaning the companies have to make the stuff so people can buy it. If the people don’t have the money, which the 99% is the biggest buyers of, then the companies don’t need to make as much product. Now how do companies make products? That’s right! They use employees. If they have an increased demand then they need more employees to fulfill that demand and keep the supply flowing.

This doesn’t only apply to actual tangible goods. Look at the restaurant industry. I’m not talking fast food like McDonalds. I’ll get to that in a minute.

An average meal for a family of four at Red Lobster can easily exceed $100 dollars today. This is a nice treat to a family, but in this economy….who the hell has a $100 to blow on a meal? That means Red Lobster doesn’t need as many servers or kitchen staff to meet their demands. So when someone quits they just don’t rehire. If it gets to bad, they just fire.

Of course we do have McDonalds and other fast food places out there. That family of 4 can have 4-5 meals at one of these places as the nicer meal at Red Lobster will cost, so they now go there. That’s why we see these places hiring. Of course the problem there is that these jobs pay a lot less than being a server at a nicer restaurant.

The same also applies to retail. This is the distribution hub for the products and if there isn’t a big demand then there isn’t a big need for sales staff, cashiers, stockers, etc.

I know this all seems very elementary and it is. The fact that our elected leaders either don’t understand this simplest of economic principals or that they choose to lie to the American people is mind boggling, but not as mind boggling is the millions of Americans who buy into it. The conservative policies of trickle down through decreased taxes on the rich is destroying this country. We have been experimenting with it for nearly 40 years and look where we are at today.

Fixing the economy is hard, but it wouldn’t be as hard as it is today if our leaders and a large portion of the American people would stop and go back to the basics of economics. It’s a very simple concept that anyone should be able to grasp.