President Obama, Fed Chairman Bernanke, Secretary Geithner, and the President’s economic advisers can’t understand why our economy isn’t creating jobs. It is no mystery to me or, I suspect, to anyone who has created, run, or even seriously thought about running a business. Unfortunately there is little business experience in the Obama administration.
When government increases business costs, increases uncertainties about future costs and risks, and reduces the possible benefits from operating a successful business, fewer people will risk their time, money, efforts, and the jobs of current employees to take on additional risks by building inventory, creating new products, or hiring more people.
Starting and operating a business is risky. On average one in every four new businesses fails within one year. After ten years more than seven of every ten new businesses has failed. (From Census Bureau data, See Small Business Trends http://smallbiztrends.com/2008/04/startup-failure-rates.html) Entrepreneurs and investors lost the time and money spent trying to make the business successful and the money they could have earned doing something else.
In a recession key business objectives typically are business survival, maintaining current employees, and preparing for future unknowns.
Before making new investments, successful business owners estimate whether future income will cover likely costs, debts, salaries, a little extra for unexpected costs, and incentives for extra risk taking.
The current administration has created a high risk business environment and it continues to try to increase wage and benefit costs, energy costs, and regulatory costs. On top of that it has created an uncertain tax environment making it impossible to estimate the possible return from risk taking.
The real mystery is not why jobs are not being created. The real surprise is that so many Americans are still willing to risk their own and their family’s future by taking risks and creating jobs. The people who take these risks, especially in this anti-business environment, deserve our praise, our thanks, and if they are successful, they deserve to earn a very high return on their investment.
Don Ewing
Meredith,
