American Elephants

Three Myths of Capitalilsm by The Elephant's Child

Here’s Harvard economist Jeffrey Miron, explaining three myths of Capitalism.


Looking for Help in All the Wrong Places! by The Elephant's Child
September 4, 2011, 9:08 pm
Filed under: Capitalism, Economy, Freedom, Law | Tags: , ,

Happy Labor Day. Our $15 trillion U.S. economy created not one single new net job for the month of August.  The Labor Department also revised jobs down for June and July by 58,000.  That’s a lot of hardship out there.  The jobless rate for Black teenagers jumped to 46.5% from 39.2%.  Involuntary part-time workers increased by 400,000 — that’s people who would work full-time if they could find a full-time job.

That makes the stakes pretty high for President Obama’s big jobs speech next Thursday. I’m not hopeful.  We all know that most of the new jobs created in this country come from new entrepreneurial startups and from small entrepreneurs growing their businesses.

Why isn’t the president doing everything he can to make it easier for them to find capital, grow and hire people? Because he thinks these things should be done by government. He wants money to send potential workers back to school. He wants government to nurture entrepreneurs — I don’t know if he wants government to provide the ideas, but he has already said that he wants a government program to offer mentors.  And he wants the Department of Education to see that students are trained for jobs. And how long would it take for a new jobs curriculum to be developed, hire teachers and put students through a 4 year course. Brilliant.

Henry Nothhaft, author of Great Again; Revitalizing America’s Entrepreneurial Leadership, and a veteran entrepreneur wrote in a Wall Street Journal op-ed that earlier this year, Obama convened a summit of 20 of the nation’s top CEOs to discuss ways to create more jobs. Then he appointed GE’s Jeffrey Immelt to chair the jobs and competitive council. Mr. Nothhaft continues:

I’m sure that Jeff Immelt is an excellent CEO. It took more than a little skill, after all, for GE to avoid paying even a penny of tax on $150 billion in revenues. But he and his fellow Fortune 100 CEOs don’t know much about job creation. In fact, they’re a “who’s who” of outsourcers of American jobs. Over the last 10 years, U.S. multinational firms cut their domestic work forces by 2.9 million while boosting hiring abroad by 2.4 million.

Few of our elected representatives have business experience, and fewer yet have ever had to meet a payroll, and it shows in the legislation they come up with.  Grace Marie Turner points out that small businesses of 50 employees are not going to hire the 51st because of ObamaCare.  It means that they would become subject to ObamaCare rules for health care for their employees.  The rise in the capital gains tax in the health-care bill will penalize those who might invest in startups.

The Sarbanes-Oxley law passed by a Republican-led Congress forces small firms to include the onerous costs of new accounting rules meant to stop fraudulent behavior by big businesses, although small businesses don’t pose any risk to the economy. What the law did was to cripple the IPO market and job creation because of the vastly increased costs of going public.

Last week Speaker of the House John Boehner asked the White House to disclose any rules in the works with economic costs of one billion or more.  The first two years of the Bush administration combined had 103.  The Obama regulatory agenda for 2011 contained 219 such items. Mr. Obama responded by listing seven pending major rules topping $1 billion, like the EPA’s ozone rules topping $90 billion, and the DOT motor vehicle safety standard for rearview mirrors which came in at $3 billion. But these rules, Obama explained, are “merely proposed.”

So to this administration, ObamaCare doesn’t matter because it doesn’t kick in until 2014, and the other regulations are only proposals. So they do not recognize the nature of business plans, and do not understand that entrepreneurs are taking big risks when they start a business, and factor in—as more risk—any uncertainty hanging over them. So if you wonder why no new jobs were created in August, there it is.

Government does not create entrepreneurs, and is not a source of ideas. Government is the enemy, constantly creating barriers to the possibilities offered by free market capitalism.  But the Obama administration is not much interested in free-market capitalism.

The Copenhagen Philharmonic Symphony Does a Flash Mob Appearance by The Elephant's Child

The Copenhagen Philharmonic Symphony Orchestra assembles at Copenhagen’s Central Train Station to play Ravel’s Bolero. Very very nice.

(h/t: Powerline)

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