Want to create jobs? Try capitalism

The government can summit away. Capitalism is the real, and only, solution to job creation.

By InvestorPlace Dec 3, 2009 4:19PM

InvestorPlace MediaBy 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.


Defense Stocks That Should Surge on Obama's Afghanistan Plan


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.


Related Articles:

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
266 rated 2
485 rated 3
660 rated 4
586 rated 5
652 rated 6
640 rated 7
504 rated 8
289 rated 9
159 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.