Are the Rich obstructing Job creation?

There was an article a week back by Henry Blodget on a rich American destroying the Fiction that Rich people create the Jobs http://finance.yahoo.com/blogs/daily-ticker/finally-rich-american-destroys-fiction-rich-people-create-152949393.html  The Rich american he quotes is Nick Hanauer.  "Suggesting that "rich entrepreneurs and investors" create the jobs, therefore, Hanauer observes, is like suggesting that squirrels create evolution."  The whole article is based on a wrong premise.  Job creation has nothing to do with the rich, middle class or the poor.  Job creation happens when there is more exchange of goods and services between people (read economic growth) and when this higher activity of exchange needs more people to support the exchange.  The whole eco system surrounding an economy matters - it is not just entrepreneurs or the customers or the govt that is solely responsible for job creation.  Everything must work together to keep the economic machine (of goods and services exchange) running smoothly.

Entrepreneurs play their part by thinking up new products or services that people may be interested in exchanging and those new products or services are necessary for the economy to grow.  The people involved in the exchange must have productive skills to make the exchange happen.  We all earn a certain amount of money based on the skills we possess and that money is used to exchange for products or services with other people.  If I need to afford to buy an iPhone, I must have provided sufficient skilled work in the economy to be able to afford the iPhone.  Ultimately the economic growth and job creating power of a nation comes down to the productivity of the people in the economy.  Productivity is measured in the amount of resources needed to create a certain product or service.  The Productivity increases as we learn to use lower amount of resources to create the same product or service - this raises the standard of living of a nation.  The reason I can't sell an iPhone to an average Bangladeshi is because that average person in Bangladesh is not productive enough to sell a service or product in exchange for an iPhone. 

Personal Savings rate of a Nation - How much is enough?

There was once again another op-ed in the New York times last week bemoaning the US's low savings rate and how other developed nations in Europe are saving a lot more.  The author pointed to a data that savings rates have recently fallen below 4 percent.  So I wondered where that info would have come and stumbled upon the data on the Bureau of economic analysis website (http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1, abbreviated data attached below).
http://www.nytimes.com/2011/11/25/opinion/why-we-spend-why-they-save.html

[Billions of dollars] Seasonally adjusted at annual rates
Bureau of Economic Analysis
Last Revised on: November 22, 2011 - Next Release Date December 22, 2011
Line		2011
		I	II	III
27	Disposable personal income	11,481	11,559	11,565
28	Less: Personal outlays	10,902	11,003	11,131
29	Personal consumption expenditures	10,572	10,676	10,799
30	Personal interest payments /3/	160	156	160
31	Personal current transfer payments	170	171	172
32	To government	97	97	98
33	To the rest of the world (net)	74	74	74
34	Equals: Personal saving	579	557	435
35	Personal saving as a percentage of disposable personal income	5.0%	4.8%	3.8%

 This is aggregate savings rate and doesn't tell us anything about the more important inter-generational savings rate.  Let's make a bullet list of why we need to save in general:

• To tide over any short-term job loss.  My rule of thumb would be 6 months of earnings.  You can't save for long-term unemployment - long-term unemployment is due to structural problems in the society and a savings rate boost won't cure it.
• To pay for a big expense in the future that can be forseen today - like kid's college education.  Again rule of thumb would be to have atleast 50% of each kid's college expense saved by the time they enter college.  
• To pay for the down-payment on a home - the 0% down-payment days are gone, but one can still get decent mortgage rates with a 10% down.  Again a savings goal could be to have the downpayment saved in say 5 years time.   
• To tide over some unexpected expenses that happen every now and then.  This could be for a hospital stay, a car repair, a home repair etc.  Rule of thumb would be like one month of pay.  You are not going to save for a Cancer care or a heart surgery - one has to have insurance coverage to pay most of those kind of high dollar expenses.   
• Save for Retirement - this is the biggie.  This topic is worth several blog articles.  One has to be reasonable on it - everybody can't retire at 55, can't retire in the Caribbean islands, can't expect a lavish lifestyle.  I see a lot of bank websites that show huge amounts of retirement money needed on their retirement calculators.   

We shouldn't expect retirees to save on the social security or the dividend checks they receive every month.  We can't expect every citizen to save and so the society needs to have safety nets to protect the basic necessities of the population that doesn't save.  People who can't save shouldn't expect to buy a home but keep renting.  There are different savings needs and so different savings rates needed for the different age groups.  There is no point bemoaning the low aggregate savings rate of a nation.  A net export nation can sustain a high savings rate but every nation can't be a net exporter (mathematically impossible).  A high aggregate savings rate in a balanced economy (that doesn't have huge trade surplus or deficit) points to large inefficiencies in exchange of goods and services.  A nation can have an aggregate savings rate close to zero and still be a vibrant society as long as there are different inter-generational savings.