Political Rhetoric Doesn’t Match Economic Reality

We are losing jobs in America faster than Vice President Joe Biden can contradict President Obama. While Biden tells us that the administration misread the economy, Obama says the so-called stimulus bill is working as intended.

The administration warned six months ago that if we didn’t pass the stimulus bill right away, unemployment could reach an astonishing 8 percent. Well, we got stimulated and now nearly 10 percent of Americans are out of work. The teenage jobless rate is almost 25 percent, which doesn’t bode well for the future of the American work ethic and job skills.

Just 15 months ago, unemployment stood at about 5 percent — that’s considered nearly full employment. Since Obama has taken office, we’ve lost more than 2 million jobs.

Obama tells us to be patient while he hurries. He promised to “create or save 3 or 4 million jobs.” Now he promises 5 million green jobs. So, what gives?

When is Obama going to tell us if he is creating or saving jobs? If you still have your job, do you owe the president a thank-you letter?

Or are you standing by with your shovel to build one of those roads, bridges or windmills? One of my favorite ancient Chinese proverbs says, “Man wait for long time with mouth open before roast duck fly in.” It seems there are lots of people standing around with their mouths open.

Let’s start at the beginning: Jobs are the result of productivity. If we opened a deli and customers stood in line all day, we’d better hire more people. But we can’t hire a bunch of people first and then hope for customers to line up.

And hiring people costs money. Labor is just one slice of the pie that business owners have to pay for. So are taxes, fees, and utilities. What if all of these costs increased? Are businesses likely to hire more or fewer people?

Business owners can look forward to paying more for all these things. Making business more expensive and burdensome is bad for all of us. It’ll be harder to find jobs when companies are paying more money to the government. Moreover, companies will have trouble keeping people hired.

Think about it. Labor costs went up July 24 when the minimum wage rose from $6.55 an hour to $7.25. The labor slice of the business pie will get bigger, which means another slice must get smaller.

It won’t come out of the tax slice, that’s for sure. The Obama administration and Congress are threatening higher income taxes for those making more than a couple hundred thousand dollars per year, higher capital gains taxes and higher corporate taxes.
And it won’t come out of the slice of pie that goes toward fees and business licenses either. The government continues to tell Americans that it’s an ever more expensive privilege to do business. Just complying with the alphabet soup of administrative agencies costs an arm and a kidney.

Don’t even think about skimping on utilities. Congress is sprinting to pass the cap-and-trade bill, which is designed to make energy costs more expensive. And President Obama is waiting at the finish line with a stopwatch and a pen to sign it into law.
All of this government pie is making me sick. And the economy is getting sicker. I never thought Uncle Sam would grow so fat, gluttonous, and grabby. Is it any wonder the economy shrinks and people lose jobs while the government digs in?
We should remind ourselves about the goose that laid the golden egg. Government does not create wealth — it confiscates it from the producers. The economy can only take so much.

The economy certainly can’t sustain the colossal healthcare costs that Congress is threatening or the back-door unionization on the horizon. The American auto industry broke down largely because of the United Auto Workers union overload. Costs can be shifted, but not ignored. And ultimately fiscal reckoning arrives with a vengeance.

We can expect more job losses because of political plunder. Economics is all about how scarce resources are allocated among people with unlimited wants. Government by nature shifts capital from its most productive uses to its least. The proof is that government subsidizes projects that real investors avoid – political payoffs outweigh profits.

Treasury Secretary Tim Geithner says the deep and extended recession is necessary and healthy, and that families and government will go back to living within their means. In reality, the family budget shrinks while the federal budget explodes.

The political rhetoric doesn’t match the economic reality. If it did, Geithner would have said, “Let them eat pie!”