Basic economics – governments do not create jobs. Yes, governments can hire people to do work but they can only be funded by taking money from other people (via taxes) or borrowing money (which then requires repayment, which requires taking even more money from other people via taxes). Government jobs do not create wealth.
Government sends signals, economic signals, to the job creators in private industry through various policies and regulations. It set the field, the platform as it were, for the creation or destruction of jobs by those signals (present and future). Tax policy is one of the large "things" that the real job creators (the private sector) take into account as an important signal in what they will be doing. However, because of the propensity of politicians to use the tax code to fulfill their own philosophy, the private sector will judge what to do based on what they see.
Like now. Some thoughts I saw over at American Thinker:
When the jobs report for November came out last week, many so-called "experts" were shocked at the massive loss of an estimated 533 thousand jobs…
Let me attempt to help out these "curious capitalists" (though I am still skeptical that anyone working for CNN or Time is either curious or a capitalist). I caused part of this job loss and I know precisely why; the election. The results portend big trouble for small business.
The job destruction process has started. We are about 20% of the way through our ramp down process and on schedule to complete the shut down by spring 2009. Watch the financial news and you will see continued job cuts each month. We are not alone in our strategy. Far from it. Atlas has shrugged all over the country.
Like many business owners, we are no longer willing to take all of the financial and legal risks and put up with all of the aggravation of owning and running a business. Not with the prospects of even higher taxes, more regulation, more litigation and more emboldened bureaucrats on the horizon…
…Liberals seem to be clueless as to where "the money" comes from. They love to tax, regulate and redistribute wealth — all the while decrying the very profit motive that created it — something they do not understand. If they did, they would not naively insist that a business that is out of money, out of customers and out of credit stay open so as to pay employees.
And that is but one example of why the lay-offs of November 2008…fall, in reality, on the Obama election. Business owners understand that the election of 2008 just gave a lot more power to people who think like these liberals in Illinois…
It is no secret that owners circulated endless emails leading up to election day discussing lay off plans were Obama to win. Entrepreneurs instinctively understand the danger posed by larger liberal majorities in power. The risk-reward equation and fierce independence spirit of start up businesses are anathema to the class warfare, equality of outcome and spread the wealth mentality of the left.
We have very little appetite to have our lives run by elected or un-elected officials like Barney Frank and Jamie Gorelick. We have no appetite to be taxed even more by the likes of Charlie Rangel…Congress, by their own admission, cannot even run their own damned dining room with a captive customer base! Some of them refuse to pay their own tax burden. Why in the world would we subject ourselves to their ilk armed with the unchecked powers of the Oval Office and both houses of congress and a massive army of bureaucrats?
We got into business to be independent. We will get out for the same reason.
The fact that Obama is not in office yet is irrelevant. Businesses must see "around the corner" and plan accordingly. Rightly or wrongly, business owners see a huge anti-business shift in motion and they are making preparations NOW…
Most of the kind of people who start and run businesses are by definition trying to opt out of depending on anyone else – be it a large corporation or government — for their welfare. We take on tremendous risks and responsibilities. We do so expecting a better than average return. Since we require nothing from government, most of us deeply resent and resist being pestered by government.
For nearly 30 years, I have been one of these business people. It was an amazing journey and literally involved blood, sweat and tears. But now I am done. This election screams that we are going to see a deterioration of the risk-reward equation and the ability to be left alone…
So, like many business owners, I will "stay home" so to speak. Others more brave than I are opting to try and stay in business by cutting way back on purchases and payroll…They are not waiting for the little sign on Obama’s lectern to be updated to the official Presidential seal. November 2008 job losses belong to "The Office of the President Elect." I know. I caused some of them, and I know why.
Basic economics – make it unprofitable, or harder to be profitable and competitive, and people will stop trying at the margins. Take away the reward for that risk via taxes reduces that margin even more. And Obama with his rhetoric has caused this backlash. People just don’t vote with the pull of the lever but with feet and dollars….and Obama is losing that last election.
I really do wish that elected politicians who are allowed to set tax policy had to start, run, and then sell a business. Maybe then, they’d have a better idea of what their actions would do. And I wish our population was sufficiently educated to understand what is happening – but our education system has shown, again, to be wanting.
Based on this article, wouldn’t it be better to have the Fair Tax with which economic decisions by companies are made solely by on real prospects and ROI instead of the impacts of tax policies.
(H/T: Instapundit)
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