Welcome to October, the start of a new government fiscal year. 2010 was the year of “jobs created or saved.” Bank and business bail-outs may have begun long before this year, but 2010 saw what effects flow from nationalizing big business.
Now that the budget says 2011, what has the government done for the individual this year? Despite hundreds of billions of stimulus dollars flooding the economy, unemployment remains in double digits.
In February Treasury Secretary Tim Geithner called the government's economic efforts “inadequate,” noting that the Administration needed to “fundamentally reshap[e] the government's program to repair the financial system.” Geithner, a human Laffer curve of robust tax irresponsibility, is the most egregious bail-out proponent remaining in Obama’s cabinet.
Business is not like government. Geithner’s mentality lends itself well to growing government. Geithner’s mentality would not last a year in business.
Government is comprised of millions of people with billions of priorities. Business reflects a single priority: Maximizing the bottom line. Groups involved with government cooperate only inasmuch as they can agree. Groups involved with business quickly learn to cooperate at all times, because the moment it costs a business more to keep an employee than to fire him, he will be fired.
Similarly, for a business to hire a new employee, that company’s bottom line must benefit from the hire. If it costs $20,000 to hire a new employee, the business will only hire if it anticipates earning $20,001. If the bottom line cannot support the cost of a new worker, she simply will not be hired.
Funds alone cannot generate jobs. As with any financial interaction, money is only as good as the probability of your being able to use it. When dollar hopefuls are very uncertain about their ability to use money in the future, they save it. Businesses are not like government; they are risk averse.
If the government wants more people to be employed, it should get as far away from the hiring process as possible. Only when a business can assess its finances and capabilities can it make a real determination as to how much a potential new employee is worth.
When government keeps fiddling with the works—flooding business competitors with funds, levying ominous health care costs on certain business sizes, and nationalizing some sectors but not others, businesses have no choice but to freeze.
Market uncertainty makes it impossible for businesses to make decisions. The convoluted health care revolution is convoluted enough on its own to freeze the private sector pipes; add pending financial regulations, taxes, and laws that are indecipherable even to the regulators who write them. Even Nancy Pelosi admits we need to pass the bill, subjecting it to interpretation, before we can “find out what’s in it.”
Just like so much sausage, even once we pass the bill we don’t know where it comes from. To “stimulate” the economy with one dollar, the government must first take it from the people.
Printing new money for economic stimulus is even worse—this deflates the value of each dollar, so prices rise the middle class disintegrates. Printing money was a favorite of the depression-era German government, and led to Germans pushing wheelbarrows full of marks and boiling wallpaper for dinner in the early 1930’s. This hardly fosters job growth or stable politics, though Germany is okay now, I suppose.
Since the Obama administration recognized a recession in early 2009, the government has taken nearly $3 trillion dollars out of the economy and has promised nearly $11 trillion more in government programs. In that time the American economy has shrunk by over nine million jobs.
Government by definition operates at a loss, funded by takings and the future. Businesses do not have that luxury. Government attempted to save the private sector by tapping individuals’ wallets. When that was not enough, government nationalized businesses to tap their savings too.
Until businesses can make reasonable predictions about the future, they will not invest in new hires. The best thing the government can do to help the economy is to get out of the way.