American Elephants

This is the Appalling Story of Governmental “Civil Forfeiture” by The Elephant's Child

The stories of innocent people being caught up in governmental prosecutions through no fault of their own seem to be increasing. We need strong watchdogs to make sure that government employees are not empowered beyond the original intent of the law. There are simply way too many stories of officials puffed up with powers which they have no right to assume.

The traditional protections were the glare of public opinion, and journalists who saw their job as the official watchdogs of government. Instead the media have become partisan enablers. It’s no wonder that newspapers are dying.

A Growing Economy Creates Jobs, Not the Other Way Around! by The Elephant's Child

The idea that creating jobs will lead to growth and prosperity is a fallacy that is at the heart of our unemployment problems. It puts the cart before the horse. It’s actually the other way around.  Growth causes employment, employment doesn’t cause growth.

This comes from venture capitalist Bill Frezza , as relayed by economics and finance  Professor Mark J. Perry of the University of Michigan at his blog Carpe Diem. It is particularly worth repeating, because sometimes an idea that you have heard in one way or another many times, suddenly sinks in when stated particularly clearly.

When jobs are treated as ends rather than means, the perverse effect of pursing policies designed to artificially inflate employment figures only serves to make things worse.

Hundreds of billions of dollars have been spent on “stimulus,” and simply evaporated, and after hundreds of pronouncements of “jobs created and saved”to no effect, and now facing the strong possibility of a double-dip recession, now we are told we must pass Stimulus Jr. or the American Jobs Bill.  Pass this bill Now!  Well, not so fast. Mr. Frezza continues:

As impolitic as it is to say out loud, we need to face the fact that jobs are a necessary evil.  In any rationally managed business the payroll is a burden, not a benefit.  Entrepreneurs and hiring managers only add staff if they think additional employees will produce more value than they consume. This happens as a matter of course in healthy, growing businesses when the amount of work that needs to be done exceeds the number of hands on deck to do it.  Increasing the umber of hands when the amount of work is unpredictable, stagnant, or declining is a recipe or bankruptcy.

The challenge gets compounded when companies are forced to devote ever more of their employees’ time to activities that deliver no benefit beyond keeping the expanding army of federal bureaucrats at bay. According to a recent report from the White House Office of Management and Budget, Americans spent 8.8 billion hours filling out government forms in fiscal year 2010.  These are hours sucked out of the productive economy.  OMB estimates that, at $20 an hour, the annual dead-weight loss of these compliance activities would come to $176 billion.

And that doesn’t even count the lawyers or accountants or the costs of actually complying with what is required by all the paperwork. “What about all that cash being hoarded on corporate balance sheets?” whines President Obama. “Why don’t corporations use that money to hire more workers?” Because it just doesn’t work that way.

Here’s a little story about a man who bought  a 66 Dodge Polara and has spent several years restoring it.  The mechanic who had helped him over the years including rebuilding the engine, told him he had closed up shop, and would come to his house.  Small business is being driven underground because the business climate, permitting and inspection have become too onerous.

He has another story about the chicken industry. The biggest cost in raising chickens is the cost of corn. Historically, it has hovered around $2.50 a bushel. Federal corn ethanol mandates require that 50% of the corn crop be used for fuel. Corn is running around $7.00 a bushel. Fuel distilled from corn is more expensive, less efficient (a gallon will not take you as far) and more environmentally damaging than gasoline. Two more examples of the disastrous effect of government interference in markets.

Does demand create supply or does supply create demand?

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