None of us who actually create jobs were surprised at the dismal May employment numbers, while the President’s economists were shocked. What does that tell you?
Excluding temporary census workers, only 25,000 private sector jobs were added in May, less than 20% of the number needed just to keep pace with the growth in the workforce. The President’s crack team of Keynesian number crunchers had forecasted around 500,000.
Mr. Obama somehow managed to blame businesses for the blown call, chiding them for unwarranted hiring reticence in the face of an expanding GDP. In doing so, he displayed an unnerving lack of understanding of how jobs are created and how GDP is aggregated.
Businesses do not hire workers to grow the economy, to make a President’s economic recovery plan work, or to keep some magic ratio to GDP; we only hire workers to meet increased demand for our products and services. And demand is not growing, it is shrinking.
Government is “stimulating” the economy with deficit spending that exceeds 9% of GDP, yet total GDP growth drops to around 3% when consumer spending and business investment are added. You do the math.
While the government continues to insist that its stimulus schemes have jump-started the economy into recovery, the evidence says otherwise. Common sense would tell you that giving
teachers a raise will not stimulate an
foundry to recall its laid off pipefitters. Ohio
And who in their right mind would re-open a closed foundry or build a new one, facing increased taxes on profits and capital gains, a hostile regulatory environment, new and uncertain health care obligations, VAT, cap and trade energy rationing, and union card check?
Nobody would, nobody is, and nobody will. And that, Mr. President, is why those
never getting their jobs back – ever. Ohio
This is the cruel reality that government economists haven’t programmed into their computers’ forecasting models. History is not repeating itself because humans act rationally and circumstances have changed.
Why should an entrepreneur risk his depleted 401(k) to start a business that must pay higher minimum wages, provide mandated benefits, and comply with new health care record-keeping requirements, just so he can pay higher taxes on any profits that might remain? Why not take a six figure government job and be set for life?
We know how to create jobs; 40 million new American jobs were created in the last quarter of the 20th century, the era of deregulation, tax reduction, fiscal restraint, monetary moderation, and free markets.
And we know how to kill jobs; 8 million jobs have been lost in the past three years, the new era of increased regulation, tax increases, fiscal irresponsibility, monetary expansion, and government interventions into markets.
The key to economic recovery is not mysterious; we need only to extract the government monkey wrench and the market machinery will turn again on its own.
Eliminate taxes on business earnings, capital gains, and inheritance; de-regulate over-regulated industries; dismantle corporate welfare subsidies, repeal health care, and stabilize the currency; stop cap and trade, stop card check, and vote down any new legislation that has the words “comprehensive” or “reform” in its title.
When markets work, people do. Until the administration economists grasp that concept, they will continue to be shocked when their predictions don’t come true.
Moment Of Clarity” is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D. Visit Tim’s website www.timnerenz.com to find your moment.