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Thursday, September 15, 2011

President Obama's Phantom Jobs Bill

The president has a new jobs bill. Okay, really he has a few suggestions for a bill that hasn't yet materialized, but for the sake of argument let's pretend he actually took the time to write one. What I find interesting is the place from whence President Obama believes jobs should come. He suggests "investing in infrastructure," a code-phrase for make-work programs that would have been paid for by local governments if they were truly necessary. He will likely suggest extending unemployment yet again, lengthening the vacation that the unemployed may take before really having to begin the search for a job. Research has shown time and time again that increasing the timeline of unemployment benefits increases the number of unemployed. The president also wants tax breaks "for the wealthiest Americans," a bonus of $2,500 for each new hire. However, he also wants to increase their total tax burden. My step-dad once made me such an offer. When I asked for an allowance, he said, "Okay. I'll pay you 50 cents a week, but you'll have to pay me five dollars a week for rent."

What this as-of-yet-theoretical bill proves is that President Obama believes in a government-controlled, centralized economy. Jobs, to him, should be provided not by private enterprise but by government. Thus, instead of making conditions better for business, he proposes "closing tax loopholes," a fancy way of saying "raising taxes on business." Such foolishness betrays his lack of prior government experience. Every mayor and governor has granted tax breaks and other benefits to companies as an enticement to locate in their area. They know that by so doing, they will not only benefit by more jobs, but by the revenue that taxes on this income will produce. Anyone who has played SimCity knows that after a certain threshold, higher taxes means lower revenue. It's common sense to everyone but those in Washington D.C. To corporations, governments are service providers. If, in a cost-benefits analysis, the cost of services (taxes, wage rates, expensive regulations) outweigh the benefits provided by that government (protection from criminality, ease of transportation, special benefits and allowances), the corporation will choose another service provider. It's not unlike switching from Comcast to DishTV depending on which has a better selection and/or price. America needs to have the best possible combination of good service and low costs to attract companies to our shores rather than driving them away. We don't want to become the Verizon FIOS of international business environments.

While I'm waiting to hear the specifics of the president's plan, I am not hopeful. The man is a socialist; he has already signed legislation establishing government control over one-fifth of the economy (health care). He has simply taken the property of investors in corporate debt, deeming by royal proclamation that stakeholders would simply go unpaid, including teachers associations that had invested millions of their pension funds in corporate bonds. Having a socialist run a capitalist economy is like having an Amish man repair your computer. Not only is he unfamiliar with the technology--he doesn't even believe in it. I am waiting hopefully for President Obama to leave office and a businessman to enter it. Only someone who has succeeded in the private economy has the know-how to fix it.

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