Want to create jobs? Try capitalism
The government can summit away. Capitalism is the real, and only, solution to job creation.
By Jim Woods, InvestorPlace.com
As I write this, President Obama is presiding over what he's calling a "jobs summit." This is just a colorful way of describing a bunch of federal and state politicians, economists, business people and labor leaders getting together at the White House to jaw about putting people back to work.
Now, at the risk of sounding extremely disrespectful, this jobs summit is truly laughable. Not that the nation's 10.2% unemployment rate is any laughing matter, far from it. In fact, the sad state of employment in this country is something that makes my blood boil.
But what makes me even more furious is that the federal government has decided to take the lead in job creation, as if the government were the ultimate arbiter on jobs.
My intellectual brother-in-arms, the great John Stossel, expressed it best in this Foxbusiness.com article: "What conceit. The political class thinks that economies revolve around them, that Washington makes things happen, that politicians are the most important players."
You see, the hubris here is that the government can come up with some new magic policy prescriptions and/or new government programs that will rescue the nation from the ravages of unemployment. They act as if creating jobs were somehow as mysterious as physicists' quest for a theory of everything. But really, isn't the formula for job creation pretty well-known by now?
As Stossel points out, "When government sets simple rules that everyone understands and then gets out of the way, free people create jobs." Perhaps an even simpler way of saying this is that where you have capitalism, you have job creation.
You see, job creation really is no mystery. It's largely a matter of tax cuts to encourage investment, entrepreneurship and risk-taking. It's also a matter of reducing regulatory constraints on freedom and removing disincentives for expanding and starting businesses.
As David Malpass, an economist and the president of Encima Global LLC, recently wrote in Forbes.com, "The U.S. knows more than any country about how to create millions of jobs, having done it in the 1960s and again in the 1980s and 1990s. The answer lies in small businesses that take advantage of freedom, a sound currency and low tax rates. Anytime those three things are available, they hire like crazy."
Once again, this is just another way of saying that capitalism is the real, and only, solution to job creation.
Of course, there are quite a few opposing viewpoints here. Not everyone agrees that more freedom equals more jobs. In a recent New York Times editorial, columnist and Nobel Prize-winning economist Paul Krugman said, "…it's time for an emergency jobs program." And his solution? "…the federal government could provide jobs by ... providing jobs. It's time for at least a small-scale version of the New Deal's Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment."
Krugman never ceases to amaze us proponents of capitalism. You can always count on him to dredge up some thoroughly discredited, anachronistic government-centric solution to an economic problem. His argument always involves more government spending, more government involvement in the economy, more intrusion into the lives of businessmen and yes, less capitalism and less freedom.
The way I see it, we have a choice to make. We can take the reins off business and allow capitalism to create more jobs or we can continue detuning our nation's job engine with increased taxation, more diversion of wealth from productive citizens toward New Deal-like projects and less capitalism.
Let's hope for all our sakes that capitalism prevails.
All our money and all the good jobs are in China and India. That's because most of what we consume is imported. Our money went there; they took our money and bought our debt, and we pay them interest from our taxes and purchases and purchases continue the cycle.
Goods sold at the discount retailers and grocery stores are mostly imports.
While job losses are slowing, this is because companies are running out of jobs to cut. So, when the job recovery happens, most of the jobs will be low paying service and minimum wage jobs. Companies have found they can get by with fewer high paid employees.
The skilled labor and management jobs are where the goods are manufactured. Government can help turn you laid-off skilled workers and supervisors into Wal-mart and Home Depot part-timers...or shovel bearers.
What we need is to free capitalism; revise the tax code; and watch as the economy continues and grows. Get government off our backs.
Finally, everyone should pay some taxes. If you live and work here and love this country and use our resources, everybody should pay something. OTHERWISE, ONLY RICH PEOPLE SHOULD VOTE. Political demons who sell you "tax the rich" are really stealing your wealth.
"Stupid liberals pushed banks to give huge home loans to people who couldn't afford them for the last two decades."
Absolutely false, the sub-prime debacle was caused by the Busch administration refusing to enforce mortgage regulations. Remember the shtick with Busch cutting stacks of regulations with a chain-saw.
Red-lining was real, it originated in the 50's when banks "red-lined" black neighborhoods and refused to finance properties within the red-lined neighborhoods. Thus greatly contributing to decline and neglect of those neighborhoods.
The dis-appearance of "red-lining" should be celebrated. ACORN's only interest is the repeal of the "red-lining" practices.
No one is against "free" markets, just unregulated markets that allow market insiders to steal uninformed market participants blind.
Preach it, Jim Woods, preach it!
Yes, Wall Street had a hand in the 10% unemployment fix we're in now (France considers 10% unemployment typical by the way).
But so did big govt. Stupid liberals pushed banks to give huge home loans to people who couldn't afford them for the last two decades. Leading the pack was the scandal-ridden ACORN group which, this is actually true, pressured banks to count food stamps and welfare payments as income on home loan applications!!!!!! (Fading Red Line; a special report, New Hope in Inner Cities: Banks Offering Mortgages, New York Times, 3/14/92).
There's a law on the books saying banks have to lend to the entire community, and ACORN and other liberals were able to twist this wording to pressure banks under threats of being called racist and lawsuits to give loans out to people on food stamps!!! If you can't buy your own food, you can't afford a house.
The banks should have refused and dealt with the billions in legal fees and charges of racism, but truth is corporations are almost as PC as people from San-Fran-Sicko. Any controversy is bad for business. They don't want to rile up the left or the right.
Wall Street screwed up, so did big govt. If we hadn't bailed out Wall Street they would have felt much more pain and had much more abuse hurled at them which they deserve. So would ACORN and many liberals.
But we would bounce back faster and smarter for next time. I don't think the perpetrators learned their lesson, I think they got away with it to a large degree.
The free market built this country, we were the richest in the world by 1890, long before the mythology about needing govt spending to prop up the economy--the truth is the govt's a leech off the economy, and is the needy one in the relationship--and we can maintain and build on our prosperity by letting capitalism do its thing, and reward the best in society, while giving little to the worst. We need a few basic regulations and immediate prosecution of financial criminals from the government, nothing else. Certainly no delusions of grandeur from politicians that they're going to "save the economy" or "fix the economy".
Learn how to run a program that's not rife with waste first. That'd be a start.
Most STEAL their money..then THINK they earned it, then don't want to pay taxes on it!
A true oligarchy and sub culture!
But hey, those who live by the sword die by it, crime will triple soon, better stay home plutocrats!
Its never going to change and its going to get ALOT worse..
Why? YOUR crony, corrupt, unregulated capitalism. or should I say plutocracy and oligarchy...
When will you people learn that capitalism does NOT have best interests of YOU the worker in mind! Well duh!
I don't feel sorry for your brainwashed anti union ,don't know whats in your best interest workers!
YOU DESERVE IT..!
Blame your corrupt, crony capitalism for ALL the problems...
The driver of the U.S. economy is the consumer -- consumer spending accounts for 70% of the nation's GDP. And the consumer is down and out.
Americans have lost 40% of their wealth in the past two years. More than $4 trillion in credit lines will have vanished by year-end. The real unemployment rate (unemployed, discouraged and part-time workers wanting full-time work) is roughly 20%; and weekly work hours and wages are stagnant. In short, most consumers have no extra income to spend.
The prerequisite for the nationalization of the banks and their subordination to the needs of society is an independent political movement of the working class on the basis of socialist policies. It is a question of state power. No capitalist government can or will carry out this task. What is required is a political and revolutionary struggle to establish a workers’ government.
What is required is a coordinated offensive by the international working class on the basis of a socialist and revolutionary program that aims to reorganize the global economy to meet social needs rather than the profit imperatives of the various national elites.
Next you'll want tax payers to pay for roads, schools, police, safety regulations, and a standing army. Before you know it, we'll be paying somewhat more in taxes and have to suffer with standards of education, life expectancy, happiness, and heathiness that might begin to compare with countries in Western Europe.....
NO UNIONS SHUT THE COUNTRY DOWN!
TRIM THE FAT- GET RID VASTLY OVERPAID, CORRUPT, UNDESERVING MANAGEMENT AND ADMINISTRATION
How dare YOU! Making the obvious simple solution so simple to understand.
You'll never make a good Marxist citizen using common sense.
His freedom, your serfdom.
His strong $, your job.
His low taxes, your crumbling infrastructure.
This article is just more of the hubris that caused the economic meltdown. I saw the republican economic proposal; it looked eerily similar to Herbert Hoover's economic policy from 1929-1932.
Republican economic plan:
Same plan that Herbert Hoover followed in 1929; didn't work then, won't work now.
It's wrong to view infrastructure investments (unless it's strictly for military purposes) as government "spending". Investments increase productivity and thus has a return on investment (ROI) that pays back the investment over time. Infrastructure investments, like roads etc., are paid back by taxes on the increased productivity by the users of the infrastructure investment.
We need to distinguish between deficit spending and deficit investment. Thus deficit investment will be paid for in the future by higher productivity. Deficit spending (unemployment benefits, tax-cuts for the middle-class, etc.) should be compensated for by increased taxes on the top 10% (plenty of money there).
We don't really know what the ROI on "green" tech infrastructure will be, so we need to to be careful, but I believe it's worth the gamble. The inter-state freeway system still pays dividends every day. Anyone think we haven't gotten our money's worth from the inter-state freeways, or the railroads, or "research" universities?
I don't like the "German" solution to unemployment. It just increases the problem with labor-mobility. Labor-mobility is a big problem for the EU economies. Denmark has a far better solution, basically unemployment insurance (mainly paid for by taxes) that enables short-term "project" style employment while also providing benefits. Employer-provided health-care is a big dis-incentive to labor-mobility in the U.S.
The big problem right now is over-leveraged consumers. Consumers need increased income so that they can reduce their debt-burden. Thus we need to redistribute income to the middle-class from the top 10% (tax the top 10%, no federal income taxes for the other 90%). We also need to GROW the economy and make sure that the increased productivity stays on main street.
Starting with Reagan, most productivity gains has been captured by the rich. The middle class has tried to keep up by reducing savings and going into debt. But you can only borrow so much before the inevitable day of reckoning arrives. It took 25 years for it to show up, but it's here, and we have to deal with it.
More Supply-Side tax-cuts now, will just make things worse. We can
balance the federal budget next year AND turn around the economy next
year. It's easy: tax the rich, cut taxes for the middle class, and
massive infrastructure investment.
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