American Elephants

Another Vote for Economic Growth! by The Elephant's Child

Randal Stephenson is chairman and CEO of AT&T Inc, and the new chairman of the Business Roundtable, an association of chief executive officers of leading U.S. companies. He wrote, in the Wall Street Journal today:

No matter the topic, the debate in Washington often comes down to whether we need more government funding for social programs or less spending to reduce the debt we leave our children. But this win-lose framing completely misses the one thing required to achieve both objectives: robust economic growth.

The simple fact is that if we want to control the deficit, preserve key entitlement programs, educate our children, grow jobs, and offer upward economic mobility for everyone, we have to get our economy growing faster.

To that end, the Business Roundtable, whose member companies generate annual revenues of more than $7 trillion while employing 16 million workers, is embracing an agenda for 2014 centered on one thing—encouraging public policies that will return the U.S. to its full growth potential.

We need four basic elements, he says:  Fiscal stability. Stop stumbling from one fiscal crisis to another. Uncertainty. Nobody can plan. Will U.S. default on its debt? Interest rates? Budget deal is a step in the right direction. Other three elements are 1) Tax reform. 2) Expanded trade. 3) Immigration reform.

A study in American Economic Review shows that a one-percentage point decrease in the average corporate tax rate would result in an increase in real U.S. GDP of between 0.4% — 0.6% within one year.

Today, one our of every five U.S. jobs is supported by international trade. NAFTA has been a dramatic success in our hemisphere.

They support immigration reform with a larger pool of visas for high-skilled workers, and new visa system for lower-skilled workers. I’ll go for that when a goodly percentage of the 91 million workers who have dropped out of the labor participation force. find work. These are people in the working age group, not retired or disabled, but simply working age people who have given up. They do not count as “unemployed” and receive no unemployment compensation.

The “shortage” of people trained in science, technology, engineering and math is largely a myth, and there are far more graduates than openings. I have read that business is reluctant to hire people who have been out of work for some time, on the assumption that if they were qualified they would not be unemployed. This may be true.

Business has little idea how to sort through job applicants, and high-tech companies have devised all sorts of elaborate tests to try to sort out those who will fit in. Anyone who has worked in business has met people who make you wonder how they possibly got hired. Unfortunately they sometimes occupy important positions, but that is true of any large organization, the larger, the worse the problem.

Economic growth is the remedy for poverty, inequality and unemployment. Growth fosters innovation and creativity, and the fuel for economic growth is freedom. Countries that pursue economic freedom get prosperity as a bonus.

According to the 2014 Index of Economic Freedom, just released by the Heritage Foundation and the Wall Street Journal, after seven straight years of decline, the U.S. has dropped out of the top 10 most economically free countries.


Cooperating With the White House Didn’t Work, Now Business is Talking Back! by The Elephant's Child

Vice President Joe Biden talked today about the three million jobs that have been “saved or created.” The question, of course, is how do you measure those “saved jobs?”

This is not from any actual measurements, but from estimates based on a “multiplier effect” that assumes that every dollar put into the economy somehow or other multiplies itself by 2.5 times, or something like that, which sounds highly dubious to me.  Why they assume that taking money out of your pocket, passing it through the government and putting it back into the economy makes it multiply itself, sounds too much like whatever those rabbits were doing in that top hat.

There were lots of clues.  Over a year ago, the White House announced that it would increase taxes on U.S. companies that operate overseas.  President Obama  wanted to end “tax breaks” for companies that “ship jobs overseas.” Someone made the suggestion that the President needed the cooperation of many big corporations if he was going to get universal health insurance, and that might be a bargaining chip.

Big Business obediently fell in line, they visited the White House, worked for ObamaCare, even made green comments.  Health care passed, and another round of unemployment benefits and more spending.  The House decided to pay for it with $14 billion in — taxes on companies that operate overseas.  Obama’s budget director Peter Orszag met with the Business Roundtable and explained that the Democrats needed the revenue.

The Business Roundtable took up Mr. Orszag’s invitation to send him their concerns.  They sent a 54– page report describing the” hundreds of actions and decisions” that Washington has taken to damage the economy.  Ivan Seiderberg, CEO of Verizon and chairman of the Business Roundtable told the Economic Club of Washington that he’d become “somewhat troubled” by a disconnect between Washington and the business community.”  Washington had created a “hostile environment for job creation and investment.”

Roundtable members thought they could advance their own interests by cooperating with Capitol Hill.  Some tried to buy political protection from regulatory agencies, wining and dining took place, but like the spurned wife  in the divorce court, they are now becoming aware of the clues that they should have noticed earlier.

The once-burned Chamber of Commerce went along with the stimulus, but has sent off an “Open Letter to the President of the United States, the United States Congress, and the American People,” titled Jobs for America.  “Ill–advised course of government expansion, major tax increases, massive deficits, and job-destroying regulations,”they say.  And “Uncertainty is the enemy of growth, investment, and job creation.” It’s very nice to finally have American business join in.  We could have used more help before all the expansion, deficits and job-destroying regulations took place, but better late than never.

The White House does not understand that creating government jobs does nothing to grow the economy, for taxpayers pay for those jobs.  And more, the actions that the administration takes create more unemployment.  The “moratorium” on drilling in the Gulf is destroying somewhere between 35,000 – 50,000 high paying  energy jobs, and there are estimates of as high as 200,000 jobs around the Gulf.  And that’s only one example.  Consider the shut down auto dealers, lost jobs in suppliers for automobile companies.  The list goes on and on.

And worst of all is that uncertainty.  Business won’t hire, investment isn’t made, orders aren’t placed because nobody knows what Washington DC is going to do next.

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