A billionaire named Nick Hanauer recently wrote an editorial for Bloomberg in which he destroyed the argument that the jobs in America are created by rich entrepreneurs and investors.

As both political parties try to blame each other for our economic mess, this argument has been repeated so often that it's now regarded as fact. And it is frequently and passionately invoked whenever someone is calling for further tax cuts for rich people — so rich people can have an incentive to create more jobs.

As I explained yesterday, this argument is absurd for many reasons, starting with:

1. Taxes on rich people are already historically low relative to other (very prosperous) periods, and
2. Many billionaires and entrepreneurs like Hanauer have already gone on record to ridicule the idea that raising capital gains and income taxes a few points would suddenly reduce the incentive to start companies.

(The entrepreneurs would just take home slightly less money from their companies, but they'd start them anyway. So cutting taxes for rich "job creators" would just make the job creators richer.)

But Hanauer's more profound point, which explains what is wrong with our economy, is that rich people actually don't create the jobs.

Customers create the jobs.

An entrepreneur can have the most brilliant idea in the world and plenty of funding to develop and sell it, but if customers can't afford to buy the company's products, the entrepreneur and his or her investors won't create a single permanent job.