Monday, November 30, 2009

Magic Bullets Part IV – Jobs

President Obama and his top economic advisors are flummoxed by the high unemployment rate. Puzzled, baffled, confused they are at joblessness which has been building since 2007 and has accelerated under this president to 10.2%. (See this dramatic animated map for the full effect: )

In order to nip this situation in the bud once and for all, the Obama administration has mobilized it’s best and brightest and is taking bold concrete decisive steps by……calling for a meeting…..a “Jobs Summit”!

Save your breath guys, here’s how government can create jobs:  stop destroying them!

That’s right, President Obama and the Democrats are destroying jobs in unprecedented numbers and unlike the “saved or created” ones, these are in real congressional districts. The truth is, government can’t create jobs or economic activity of any sustainable kind - all it can do is shuffle things around and misallocate resources. Every penny spent by government must be coerced away from the populace one way or another. There can never be a net gain, despite what partisan academics might tell you (remember the “Keynesian Multiplier”?), and this is what the framers knew when they designed a “limited government” focused only on the essentials of the state. The magic bullet for jobs is simple: stop destroying jobs; then and only then, can government save a single one.

The natural state of things is essentially full employment. The economist Adam Smith pointed out in 1776 that ancient hunter gatherers were essentially at full employment. Every member of society was busy running around getting food, making clothes, fashioning tools, defending the clan, etc.; just doing what they could to make it to the next day. The equilibrium in a healthy modern society is different from that of cave-dwellers, but the logic holds: it takes an imbalance to screw things up. So what has changed recently which could cause such an imbalance?

In November 2006 (3 years ago already!) we had an election and put both houses in the hands of the anti-growth, high-tax, big-spending Pelosi/Reid Democrats. Of course, they won the job thanks to Republicans who had lost their way, but the Democrats actually ran on a job killing platform: raising taxes, imposing huge new costs on doing business, and re-distributing wealth. Oh, and they also wanted to “roll-the-dice” on Fannie and Freddie (remember that one?)!

Then along came candidate Obama and his agenda of Unprecedented Uncertainty. One example:  First he said he’d raise the Capital Gains Rate from 15% to the same as ordinary income (soon to be 45% ish).  Then he reversed that a bit and dialed it back to 28% ish.  I think the latest plan is around 20% but I can’t keep up and that’s just the point; no one can! Much of the Credit Crisis of 2008/09 was about uncertainty and what would Obama really do? The markets didn’t actually tank until after the conventions and polls showed “Obama-The-Uncertain”, the clear leader.

That’s how you destroy jobs; raise uncertainty, raise regulation, raise inflation, raise taxes, and raise insecurity. This just about describes the Obama agenda! Stop the agenda, and jobs will be created. But as anyone paying attention knows, economic strength is not even on this President’s radar; no, he’s interested in the re-distribution of wealth, not its creation.

Don’t despair though, there actually is one politician creating jobs today and Barack Obama and the Democrats could learn a lot from this economic powerhouse. The one politician who has emerged as a one-person national job-creation machine is none other than bestselling author Sarah Palin.  Drill Baby Drill!

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