The Stimulus threw a bandaid on a flesh wound: That is, the states and unions were given taxpayer money of future generations to prop up employment for workers friendly to the Democratic party.
The money has run out.
Talk of a second stimulus is talk of another state and union bailout, for the Federal government is incapable of creating private sector jobs. They’re only capable of getting out of the way of the private sector and the government has been very determined to be in the way of business.
So the question turns to the private sector. Why aren’t jobs being created? I know this is difficult for bureaucrats to comprehend as they don’t have to make a profit, but business owners are rational. There are no reasons to take risks when there are no rewards. So, business owners refuse to expand because expansion translates into increased overhead.
What is the #1 cost of overhead? Business owners are screaming the answer. Bureaucrats are looking up the answer in their basic business text book. Hint: It’s people related. That’s right, employees present the biggest employer cost. That rule is true of nearly every industry.
Employers look at salary, benefits, unemployment insurance, legal liabilities, and now, somewhere in the nebulous future, Obamacare, and employers have zero incentive to hire more people. They’ll sit and wait, keep production costs as low as possible. They’ll pay cash for capital outlays instead of using credit.
Or, they’ll close because of ridiculous regulations — like selling used children books (lead in ink!), like arcane rules for toy manufacturers, like punitive EPA regulations on a state that’s exceeding current regulations, like invading a guitar company instead of going after union malfeasance. All these rules and regulations chip away at businesses and make their lives more difficult. A zillion dollars to change food labeling takes away from the bottom line. A business needs money to hire and create goods.
This is not difficult.
What’s difficult is sucking it up through the inevitable. Jim Pethokoukis has an excellent piece in Commentary basically running through all the “what if” scenarios. The ultimate question, though, is did President Obama’s actions help? The answer is, no (I’m only excerpting a part of it. Please go read the whole thing.):
Did Obama make it worse? It is certainly the case that he only deepened a long-term trend that threatens American prosperity more than any other. The events of 2008–2009 exposed a truth about the U.S. economy from which we had shielded ourselves: economic growth has been slowing in a worrisome way throughout the decade. The nation’s GDP has averaged 3.3 percent annual growth for the past half century. But from 2001 to 2007—before the recession hit—it averaged only 2.6 percent. Going forward, growth might be even slower due to the aftermath of the financial crisis and the aging of the population. The Congressional Budget Office, for instance, pegs long-term growth at just 2 percent or so.
But that downshift isn’t fated. The McKinsey Global Institute thinks a higher retirement age and smarter immigration policy could make the labor force grow more quickly, while smarter tax and regulatory policy could boost worker productivity. Replacing the income tax with a consumption tax, for instance, would likely make the economy grow faster over the long run by increasing investment.
These are the sorts of ideas that are likely to be a central part of the political discussion going forward in a way they never have been. The two-party debacle that was the debt-ceiling debate and the disgusted national reaction to it suggest that the American public is likely to be more open to new remedies for the nation’s ills—remedies that have not been stained by their association with the failed policies of the past four years.
We’re stuck for now with an anemic and debt-laden economy that may muddle along for years. But it didn’t have to be this way. The one thing we can all say for certain is that we could have made it better.
No one wanted to take their medicine. Is there a stomach for it now? President Obama made many promises and they’ve all failed to deliver. His stimulus prolonged the misery and starved the private sector.
President Obama speaks often of the mess he “inherited.” Well. He’s made it worse. Much worse.
div class=Amp_Commentary_Wrapdiv class=Amp_Post_TextpThe scariest part of this is what is NOT noted: The number of people relying on the government for their livelihood. Couple the jobs misery with the increase in Social Security folks and you have a perfect economic shit storm.br /
Underlying all this is systemic uncertainty. The Obama administration has created a hostile business environment that makes businesses unlikely to hire even when they have cash because they fear demand will be low and their tax obligations will increase./p/div/divdiv class=Amp_Content_Outerdiv class=Amp_Top_Wrapdiv class=Amp_Source_FirstspanAmplifyrsquo;d from a rel=clipsource target=_blank title=http://voices.washingtonpost.com/ezra-klein/2010/07/the_scariest_jobs_graph_youve.html href=http://voices.washingtonpost.com/ezra-klein/2010/07/the_scariest_jobs_graph_youve.htmlvoices.washingtonpost.com/a/span/div/divdiv class=Amp_Middle_Wrapblockquote class=Amp_Content_Item cite=http://voices.washingtonpost.com/ezra-klein/2010/07/the_scariest_jobs_graph_youve.htmltable cellpadding=0 cellspacing=0trtddiv id=entryhead
h1The scariest jobs graph you’ve seen yet/h1
/div/td/tr/table/blockquotediv class=Amp_Content_Hr/divblockquote class=Amp_Content_Item cite=http://voices.washingtonpost.com/ezra-klein/2010/07/the_scariest_jobs_graph_youve.htmltable cellpadding=0 cellspacing=0trtddiv align=center class=Amp_Content_Item_Imageimg src=http://content8.clipmarks.com/clog_clip_cache/amplify.com/B781413B-ADBF-4063-959F-AE001BFCFD6A/6E64A4A9-BB1E-409F-9933-B57D511EDCCE alt=greenstone_chart.jpg width=384 height=261//divspan class=Amp_Source_Buttona rel=clipsource target=_blank title=http://voices.washingtonpost.com/ezra-klein/2010/07/the_scariest_jobs_graph_youve.html href=http://voices.washingtonpost.com/ezra-klein/2010/07/the_scariest_jobs_graph_youve.htmlSee more at voices.washingtonpost.com/a/span/td/tr/table/blockquote/divdiv class=Amp_Bottom_Wrapnbsp;/div/divdiv class=Amp_LinkSee this Amp at a href=http://bit.ly/cqJVy0http://bit.ly/cqJVy0/a/divbr/