Keep It Simple
A job is a job is a job. So, hiring government workers means fewer unemployed. Of course, it’s not quite as simple as that. Someone has to pay for hires and that would be the taxpayers which includes small and large businesses. Nor does it do anything to fuel the engines of businesses which should be the point of any legislation that is inserted into the market process.
So, President Obama’s new partial job policy (more to come later) as outlined before Congress last week is not likely to do much, or go very far for that matter. That policy would provide money for re-hiring teachers, building schools (similar to the original stimulus plan), money for highway building, extension of unemployment benefits, continuation of payroll tax cuts and possibly passing those on to employers. Republicans may be forced to vote for the tax cuts because they like tax cuts. Problem: the cuts cut into the Social Security fund and the taxes are temporary so are unlikely to unleash the economy.
Part of government’s role is to build infrastructure, particularly highways, whose costs are at least partially covered by user fees (gasoline and highway taxes). Problem is that building roads take time. Remember those shovel ready jobs the first time around? The Miami Herald wrote an editorial headlined “Put Us Back to Work”. Government can’t put people back to work. Businesses put people to work.
So what government program does work? Certainty helps. Businesses usually work on long term plans. Knowing what to expect is important, higher taxes, higher costs or not (all of which will be passed on to consumers - inflation here we come). Obama Care is heavy uncertainty. Anti-business philosophy by the federal government creates uncertainty. Regulations that change and increase in number and depth create uncertainty. Complex and hard to interpret tax regulations cause uncertainty.
Our economy has plenty of all those uncertainties and there is no indication that there will be less. Try starting a new business and going public. Consider then studies that have to be done to build a road. Consider the regulations on just about every business. Someone pointed out that it took less than two years to build the Empire State building, but it will take 20 years to fill the gap where the Twin towers were. By the way, the big economic crash didn’t happen because there were too few regulations. The crash came because the regulators and over seers didn’t enforce the regulations that were on the books. The political reaction, however, was to pass more regulations.
This is not about being anti or pro business. This is about common sense. In the perfect world, everything, including our private lives, would be perfectly regulated by perfect people with perfect insight, perfect knowledge, perfect ideals, moral and ethics. Flash! The world isn’t perfect. Regulations can and do stifle innovation, growth and jobs. And you can’t have a tax code of 56,000 pages and regulatory bills of 1,000 to 3,000 pages. Eventually, they all come together, overlap, conflict. The result is a drag on productivity and an exponential increase in special interests and an increasing infusion of politics.
Nor is the answer in government subsidizing and otherwise protecting certain industries (think green, but not exclusively). The alliance between businesses and government not only is economically unwise, but an invitation to corruption. Business doesn’t need government assistance. It needs government to back off. Right now, business start-ups, expansions, explorations, innovations, are activities of big business with big investments and big resources. This does not help individuals move up the economic ladder and this is a big part of the oft-described income gaps.
These are more than philosophical (or, political) arguments. These are real world issues. I know. The reply will be that businesses fudge, cheat, gouge. That’s true. But so is it that government, particularly big government, beats that in spades and government has the power of taxation and policing. We are back to common sense and what works. Remember KISS. Keep it simple, stupid.
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