Fewer Manufacturing Jobs, and More Millionaires
A recent study by market research group New World Wealth revealed that 108,000 millionaires “migrated across borders” in 2018. Australia, the United States, Canada and Switzerland were the biggest recipients of the well-to-do, while Turkey, India, Russia and China were the biggest losers. We emphasize losers simply because nothing harms a country more than the loss of financial and human capital.
This rates discussion in consideration of the well-worn pledge made by members of the political class to “bring back” jobs. Manufacturing jobs are a particularly popular political promise, but if our leaders are really interested in helping their constituents, they would instead commit themselves to relentless recruitment of the world’s millionaires and billionaires. Yes, you read that right. We’re saying politicians should go against type court the rich. Please read on.
Fairly explicit in the migration of the world’s prosperous is a desire among those with means to protect their wealth from the grasping hands of politicians. Translated, the country they choose is likely to be where they put the lion’s share of their millions and billions to work. That all economic opportunity is a certain consequence of investment speaks to how essential are the world’s much-demonized ‘1 percenters’ to economic growth.
The rich and superrich uniquely possess the unspent wealth without which there is no progress. Contrary to what they teach in high school and college economics classes, consumption doesn’t drive economic growth. If it did, Peru would be as prosperous as the United States. Peruvians have consumptive desires similar to ours, but they consume less than we do precisely because they produce exponentially fewer goods and services than we do. Behind all consumption is production first. The investment that the rich provide is the driver of ever-increasing production.
Very notable about the rich is that they don’t solely bring financial capital with them. Many, and realistically most, bring much more valuable commercial capabilities that are a magnet for investment.
If anyone doubts the above assertion, they need only ask themselves what would happen if Jeff Bezos, Peter Thiel and Mark Zuckerberg announced plans to respectively move to Baltimore, Cleveland and Detroit. Each would bring much more than his multi-billion dollar net worth. To be clear, billions worth of investment would follow these most enterprising of entrepreneurs, but even more important for the growth of the now-struggling cities would be the human capital that would follow Bezos, Thiel and Zuckerberg to these somewhat “forgotten” locales.
Seemingly lost in all the political and media hype about cities supposedly harmed by factory closures is that the loss of a factory could never consign a city to also-ran status. If it could, New York and Los Angeles would be the most economically devastated places in the United States.
Indeed, one hundred years ago New York (#1) and Los Angeles (#4) listed among the top manufacturing hubs in the U.S. And while the factories and the jobs formerly within them are gone, each city thrives precisely because it’s a magnet for the mega-talented individuals whose wealth and talent powers progress, and that exists as a lure for millions of ambitious people from around the United States and around the world. Other cities like Austin, Boston, Dallas, Houston, Phoenix and Seattle can similarly claim strivers from all over. That so many people aren’t from the cities mentioned speaks to why they’re booming. Economies are made up of people, and people generally migrate to where the rich and enterprising already live and work. That’s where the opportunity is.
That’s why the desire among politicians to hide their affinity for the rich and superrich strikes us as so odd. Why would they do that? Where the rich locate their wealth and talent is nearly always where the economic growth is. Voters can handle this truth, and more realistically they’re living this truth. That’s why the populations of the cities populated by so many millionaires and billionaires continue to grow.
It’s time for politicians to catch their rhetoric and actions up to economic realities. Taking nothing away from labor unions and factories, their arrival into a city or town won’t result in booming growth. But the arrival of millionaires and billionaires surely will. Looking ahead, we’ll know that politicians are truly serious about prosperity when they start their campaigns not in a union hall or pizza joint, but in the office of a billionaire.