THE WHITE HOUSE JOB SUMMIT IGNORES THE OBVIOUS
12/6/2009
While President Obama hopes to intervene to combat unemployment, his recent job summit ignores the obvious premise that what's needed is less government intervention.
This past Thursday, President Obama held a "job summit" at the White House in which he asked for ideas about how to create jobs. The fact that he had to hold a job summit at all proves that his economic policies have failed. After all, if the stimulus plan would have worked the way he claimed it would, unemployment would not be so high now.
In his statement prior to beginning the job summit, Obama stated that many small businesses have learned to "squeeze increased productivity out of fewer workers, and this type of cost-cutting has become embedded in their culture… While this is good for profits, it’s not translating into hiring" and thus must be changed.
This statement obviously shows that the president is ignorant about the merits of free market capitalism and how it made this country so prosperous in the first place. Let us examine further:
- First, Obama's premise that small businesses are increasing productivity is wrong because this country is in a recession. This means that consumers aren’t spending capital on goods and services as they've done in the past, and this decreased spending is translating into decreased, not increased, productivity.
- Second, in a free market economy, a successful business is defined by its ability to produce as much as the market will allow at the lowest possible cost. This translates into greater efficiency, which is vital to success. But to Obama this is a faulty approach.
- Third, to Obama, cost-cutting is a bad thing for small business even though cost-cutting is one of the essential tools needed for success in a free market.
So to Obama, small business owners are responsible for the high unemployment because they are greedily hoarding their profits and refusing to hire workers because they have learned to do more with less. But apparently it hasn’t occurred to the Obama administration that their policies are threatening an uncertain future for business, and during uncertain times, businesses must cut back.
Maybe small business owners, many of whom are struggling to survive, are worried that they may be taxed into oblivion to pay for the massive health care and cap-and-trade programs being debated in Congress. If either the health care or the cap-and-trade bills are signed into law during these tough economic times, unemployment will increase even further. But the Obama administration has failed to recognize this.
So what are some obvious solutions that were not considered during the job summit? Well, how about these:
- Lower the corporate tax burden. This would free up more capital to invest and expand, and only through investment and expansion can legitimate, long-term jobs be created.
- Announce a suspension of the health care and cap-and-trade bills in Congress. These bills could potentially impose hundreds of new taxes that many small business owners fear could tax them out of business. Fear and uncertainty in the business climate always translates to less hiring.
- Stop the excessive government spending and cut wasteful federal programs. This will ease the devaluation of the dollar, stem inflation, help stabilize foreign markets, restore foreign confidence in our market, and encourage more businesses to invest and expand. And once again, expansion means more hiring.
History has shown that in an economic downturn, the fastest path to recovery is to decrease government intervention. But the job summit has proven that this obvious lesson has been lost on the Obama administration. Unfortunately that could mean continued economic instability and unemployment for many more months to come.
