Dear Friends,
It seems to me that if the government wanted to actually lower the unemployment rate in the US it would act as such.
Everything the government is doing will inevitably lead to a lower demand for labor. From the health care initiative to the cap and trade forced reductions in carbon output the government is aiming at reducing the demand for labor in the US.
Take Cap and Trade. It will produce a huge amount of new friction to doing business in the US. Costs will inevitably rise. Both of which erodes GDP growth. As GDP growth is curtailed by the higher cost of energy and the friction of regulation, the result is net loss of jobs.
More importantly the government is doing nothing to stimulate jobs. The bill entitled “Stimulus” was anything but. It’s focus was in government spending. Not on new job creation. Since the focus was on raising government spending to new levels… it was a resounding success. It never was focused on job creation so to say that it has failed in that respect is like saying the Medicare program failed in putting a man on the moon. It didn’t do what it was not designed to do. Government rhetoric aside.
Judging from the actions of the people in charge in the US they have as their goal to reduce the demand for labor in the US. A cynic might say that they are intentionally creating a dependant class. In place of the middle class. To do so, do away with the middling element, would result in a people that are dependant on the ruler. (Hard to see where that could go bad). But as I said, a cynic would believe such a thing.
So what could the government do if it really wanted to generate a demand for labor driving down the unemployment rate and raising the value of labor? What about; Targeted tax breaks to businesses that create jobs, announce a first time business startup tax break, change the regulation that funnels money from small business to ACRON, and cut taxes across the board for everyone.
Targeted tax breaks would lower the cost of labor. Lowering the cost of something of value gives people incentive to purchase that thing of value. If a job would be of marginal value to an employer and the imbedded cost of that laborer is lowered the metrics change. The marginally profitable job becomes quite profitable. Making it far more likely a position will be added to the payroll.
A first time business tax and regulation break would have more effect then it’s cost would indicate. Most businesses don’t make a profit for several years but the rhetoric would create a perception. The chief benefit would be that perception, that it is much easier to start a business, than it previously was. Many people who have good ideas are stymied by what they see as daunting regulation, taxes, and some simply fear the government. By removing, (even if only in the minds of individuals) this pernicious incentive, the number of startups would go up dramatically. After all, isn’t small startups that will generate the next Microsoft?
In a fit of stupidity the government changed the regulation of a law that had at it’s core to help fund small businesses through short term downturns. The banks and lending institutions that participated in the program were told that instead of lending to small businesses they could donate money to ACORN. The banks and lending institutions recognized their cost of doing business would go down and their political clout would rise if they donated money to ACORN instead of lending to small businesses. With all the paperwork and government regulatory costs associated with lending to business the cost calculation was easy. So ACORN’s nest has been padded at the cost to small business. (the engine of job creation). What doe’s this action say about the real objectives of the US government?
More importantly an across the board tax cut would put money into the hands of the people that produced it. If people are smart enough to earn the money they should be smart enough to spend it. But government is of another opinion… The fools would waste it on junk like food, clothing, housing, entertainment, paying down debt etc… the government can spend it on something much more valuable for the American people like, A specialized zoo enclosure for animals a zoo will never get, $500.00 hammers, bridges to nowhere, and other such enlightened projects.
But if more money is put into the hands of the people and less taken and spent by government the demand for labor would inevitably increase. More money in the hands of the people drives up demand for the things that require labor. Money in the hands of government is usually flushed down the toilet.
So… Rhetoric aside, what do the actions of the US government tell you?
