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Obama's Misguided Lack of Job Creation   June 13th, 2011
It's the idea of big-government and a centrally-planned-economy that's slowing us down       

 
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As we approach 4 years since the recession began, job creation is still pitiful despite President Obama's efforts. Or, more accurately, because of Obama's efforts.

Can Obama talks get private sector to hire more?

President Barack Obama travels to North Carolina today to talk about jobs. But is more talk going to change things for people in need of work in the U.S.?...

Goolsbee, chairman of the Council of Economic Advisers, said business leaders are working to identify some possible industries, such as manufacturing, travel and tourism and health care, and how the government can help.


I'll tell you how the government can help: It can get out of the way!

The only other thing the government can do to "help" is by giving money to an industry, thereby picking winners and losers. The problem with that is that to give money to a preferred industry, it must have taken the money from the taxpayers (or, in the case of borrowed money, from future taxpayers).

The sentence "business leaders are working to identify some possible industries, such as manufacturing, travel and tourism and health care, and how the government can help" is enough to send shivers down your spine. The fact that "business leaders" are going to pick winners for government help and losers (the industries that don't) would be enough to convince me that I don't want to move a business to North Carolina... unless my business happens to have been picked to win.

Bursts of stimulus don't work because business and consumers know the stimulus will go away. Temporary tax cuts or tax rebates don't work for the exact same reason. And the government picking winners and losers doesn't work because the government usually doesn't pick the same winners and losers as the marketplace would--which means we're spending money supporting a company that should lose while making it increasingly likely that the company that should win won't. We're spending money on rewarding inefficiency while punishing efficiency.

Aside from the structural problems that have yet to be resolved, the reason why this "recovery" isn't really performing is because the government is mucking around with everything. They're throwing everything at the problem, including the kitchen sink. Unfortunately, the economy is so busy dodging all the incoming garbage that there's no opportunity to recover... and the weight of the garbage on the economy is more burdensome every day, and the fear of what the next object to be hurled at the economy will be is enough to paralyze economic activity.

I'd buy a brand new Mustang right now if I had confidence that the government would not eventually rewrite my loan contract. I fully expect inflation in the next few years. As such, it would theoretically make sense for me to borrow the money for a new Mustang now and then pay back the fixed-payment loan in cheaper dollars that would be easier to pay. But since the government has already demonstrated that it is willing to ignore established law and has threatened to rewrite contracts (cram-downs on mortgages) I'm afraid that the administration will somehow unilaterally declare that all fixed-payment contracts become indexed to inflation. And, for this single reason, I have so far not bought the Mustang that I've been thinking about since May 2010.

I'm just one consumer, but that same kind of uncertainty is giving pause to people and companies that would potentially invest far more money than the cost of a Mustang. If I'm hesitant to spend money on a new car because of Obama's policies, is it any surprise that those with millions and billions to invest are even more hesitant?

Centrally planned economies don't work. We know that. Government intervention doesn't work because it confuses the economy and its participants. What we need is certainty: We need to know that our taxes won't change, especially that they won't go up. We need to know that the government isn't going to step in and rewrite bankruptcy law on the fly and change contracts. Obama is doing the exact opposite of what we need to have a real recovery.

We will experience a real recovery once the current correction completely plays out, and once government gets out of the way.

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