Venture Capitalist says "Tax the Rich"

Nick Hanauer, a venture capitalist from Seattle, recently spoke at a Technology, Entertainment & Design (TED) forum but his talk was not initially made available by TED.  TED explained that his Tax the Rich speech was too political and came down clearly in one party's camp.  TED seeks to be non-partisan.  However, the speech has now been posted.  Mr. Hanauer makes several points:

1. Jobs are created when there is demand for products.  Demand comes from the middle class, not from a wealthy handful.  Therefore, jobs are created by the middle class having the funds to spend.

2. The tax cuts that the wealthy have enjoyed over the past three decades has improved their standing but not that of the middle class.

3. Taxing the rich to make investments that expand and enrich the middle class is a no-brainer.

He definitely makes some interesting points but he fails to follow through with his taxing plan.  Why is taxing the rich the solution to our problem?  What investments (i.e. government spending) does he propose with these tax dollars?  How does that work?  He never explains.  And his audience didn't seem to notice his failure.  One could infer that he wanted to transfer that money to the middle class to spur consumption.  Sounds like the old 'Spread the wealth around' comment from Obama.

As his success attests, Mr. Hanauer is a good businessman, but he is no economist.  He thought the idea of 'job creators' was upside down, thus his first point that consumers create jobs.  But consumers can't buy a product or service that isn't first offered.  Steve Jobs had to make the iPhone before the consumers could buy it.  Ford had to make the Model T before there could be any demand for it.  These are the great successes for job creators.  By the same token, few people bought John DeLorean's car though he certainly created jobs before he discovered the complete lack of demand for his stainless steel sports car.  So, the rich really do create jobs but it is the middle class who determine whether they are temporary or permanent.  As for demand, he seems to think that the rich who might have 1000 times the funds as a middle class person don't consume 1000 times as much.  See, it would be better if that money were in the hands of consumers.  This from a VENTURE CAPITALIST.  Is he hiding his money under a mattress or did he invest it in a variety of companies that became successful?

One can argue about the appropriate level of taxation on high earners but the notion of government 'investing' in the middle class is nonsense.  Government spends.  It will spend every dime it collects and then borrow a nickel to invest.  The government needs to stop investing before we become Greece.