Watching people here in New Smyrna Beach, and across the country for that matter, struggle with the unemployment problem naturally brings up the most basic of questions: “Why do we have such a mess and what can we do about it?”
The first part of the question is best answered as follows: The bad economy and bad employment problems stem directly from very bad government policies, which will keep the country in the economic and employment doldrums for the foreseeable future.
The second part of the question can be answered by the following, though getting politicians to act is a whole other ballgame: Stated briefly, the keys to a good economy are low taxes, few regulations, sound money, free flowing foreign trade and a legal system that protects property rights.
Government policy in all of these areas ranges from bad to terrible. In fact it appears that any economic growth we have is a tribute to the natural robustness of markets and maybe sheer luck and is happening in spite of government policies In the field of taxation our corporate tax rates are among the highest in the world.
There is the persistent threat of removing the Bush tax cuts plus the looming taxes coupled to Obamacare and a general push to increase tax rates. The EPA is considering new standards on carbon emissions which will hit coal fired power generation especially hard and raise the cost of electric power.
None of this is conducive to job creation or a good economy. We are already weighted down with too many regulations and Obama Care if not rescinded could add a lot of new regulations which will be very costly.
Worse yet, some of the proposed regulations are unspecified which make it even harder for a company to know what they will have to contend with. All of this makes companies to delay starting or expanding.
You dare not start up something if you can’t figure the costs or are worried that new employees will subject you to new sets of regulations.
The value of our money is being inflated by the huge amount of feckless government spending. Money that has fluctuating value causes businessmen and individuals to make bad judgments about spending and investments. This is really bad for an economy.
The Obama administration has been luke warm in foreign trade. Free flowing foreign trade helps the economy in general although certain interests may be hurt by it.
Trying to protect certain American interests with tariffs and trade barriers is very expensive and hurts everyone. The erosion of property rights has become a serious problem. The American legal system was turned on its head when the financial rights of Chrysler creditors was thrown out the window and resulted in half of Chrysler now belonging to the union.
Evidently there will be no direct punishment for this type of thievery.
The penalty for this thievery is that no one will loan money to anyone who might pull this crime again. With this type of threat to property rights, capital will seek safe havens overseas where the threat of seizure is much less. Meanwhile American Workers will be without the jobs that this capital could have created.
The government is making it hard for bad mortgages to be liquidated so the mortgage market will remain jammed up and paralyzed till the bad mortgages can be liquidated.
Naturally, as the government makes it harder and harder to transact business the companies and individuals look for ways around government taxes and regulations. Temporary worker agencies will flourish. Individuals and small companies will go underground.
According to the German Reader’s Digest, half the people in Germany have some connection to the black labor market because of excessive taxes and regulations.
The short list of things that have to be done to get our country going again includes putting a moratorium on new regulations, rescinding most or all of the regulations done in the last decade and then start rescinding the regulations made before that, permanently cutting taxes at all levels, expanding foreign trade in every way possible, and quitting the assault on property rights.
Make serious cuts in the budget.
Knock off the attack on fossil fuels start drilling and overcome the paranoia over atomic power.
Make the unions play on a level playing field and that problem will go away.
Admittedly this list leaves off many things that should be done. However, it makes for a good start.
Sadly, until our leaders bite the bullet and start to do some of these things the economy and unemployment situation will continue to be dismal. What is also sad is that any leader who tries to do what must be done is attacked on all sides.
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