Trashing the Job Makers

Townhall.com ^ | January 28, 2010 | Victor Davis Hanson

[Kaslin]

A year ago Barack Obama inherited a recession brought on by financial panic following the collapse of the housing bubble. The market crash was made worse by Wall Street shenanigans and recklessness at Freddie Mac and Fannie Mae. Job losses followed.

In response, Obama pushed through a stimulus bill that went well beyond the borrowing done by George W. Bush in his last months in office. In fact, Obama and the Congress borrowed an additional $787 billion to infuse the economy with fresh job-creating cash.

The president warned us that without this borrowing, unemployment might reach double digits. Yet with the stimulus, unemployment has soared from 7.6 percent to 10 percent. That translates into over 4 million jobs lost in 2009 alone.

In reaction, an embarrassed administration continues to cite hypothetical jobs saved, rather than the actual number of jobs lost this year. Just this week senior White House adviser Valerie Jarrett, press secretary Robert Gibbs and senior White House adviser David Axelrod variously claimed "thousands and thousands," "1.5 million" and "2 million" jobs saved. If the White House insiders can't get their theoretical numbers straight, how can anyone else?

Why the continual job losses?

First, the government can create only so many jobs by borrowing and spending. It is less efficient than private enterprise in reacting to market needs -- new products, new services and new consumer tastes. Higher federal budgets eventually translate into more bureaucrats to shackle the private sector with more regulations that discourage innovation and experimentation.

In contrast, the U.S. Small Business Administration claims that small businesses employ about half of all working Americans. Yet building contractors, orthodontists, local real-estate agents and small software companies (to name just a few types of small businesses) in the last year have not been convinced that it is time to start buying new equipment and hiring more employees to gear up for increased consumer demand.

Why the continued depression among employers?

Many may suspect that the administration does not appreciate how hard it is to be self-employed -- an understandable conjecture when neither the president nor many in his Cabinet have had careers outside government or academia. Tenure and near-automatic annual pay raises do not exist in the world of the insurance agent, farmer or trucker.

Instead, when employers listen to the president's grand ideas for health-care reform, they must quietly cringe at increased costs per worker. When they hear soaring rhetoric about cap-and-trade energy policy, they must silently fear higher power costs.

Worse still has been the promiscuous talk this past year about all sorts of higher taxes.

During the 2008 campaign and the president's first year, we heard Obama promise new income taxes that would revert to the higher rates of the Clinton administration. But that would now come on top of recent new tax hikes by the states that have often upped their own income and sales taxes by considerable margins since 2000.

During the health-care debate, there were also promises of a special surcharge on "Cadillac health plans," as well as making the upper brackets pay a surcharge to fund the care of others.

And don't forget Obama's inheritance-tax proposals that would have reversed the scheduled one-year repeal (with what many expected would become permanent) of the inheritance tax to a 45 percent tax rate on anything that an individual leaves to his heirs beyond $3.5 million in value -- capital that was already taxed during its acquisition.

As a result of all this tax-talking frenzy, business owners have no idea what their new aggregate tax obligations will be or when they will kick in. They can only sense that the Obama administration wants to go after successful entrepreneurs to fund more federal entitlement for others -- as if the 5 percent of Americans who fork over 55 percent of the aggregate income tax revenue don't pay enough already.

If President Obama really wants to foster job growth, he needs to get specific. Stop the borrowing and instead tell the business community exactly what income, payroll and surcharge taxes he proposes, when they will begin -- and how much he appreciates those who will pay them.

When it comes to creating a psychological climate to encourage employers to start hiring again, a little certainty and a little praise are lot better than uncertainty and talk of taxing even more those who now already pay the most.

[ClearCase_guy]

Obama is damaging the economy on purpose. He wants to bring us down. Many people see this already, but I think 2010 will make this conclusion inescapable for amost everyone.

He's not here to help. He's here to destroy.

[Oldpuppymax]

It is the goal of Hussein and the radical left to destroy the private sector, reduce as many Americans to welfare/dependence upon Big Brother as possible and create literal panic in the streets. A frantic, bankrupt citizen is a democrat voter and an easy mark for enslavement.

[Happyinmygarden]

Why the continued depression among employers?

With all due respect to VDH whom I admire, as a long-time business owner who has had as many as 110 people on the payroll (now zero, but more about that later), I'll tell you why there is "depression among employers":

1. Four decades ago, my employees were very well paid, provided with excellent medical benefits and provided with everything they needed in order to do a good job and work in a healthy environment. They worked hard and when an employee didn't perform I fired him/her and the remainder of the staff was relieved to be rid of them too.

2. Over the years, my employees stuck with me through thick and thin. In the thin times, the warehouse staff got together and all cut their hours in order to protect a handful from being laid off.

3. The years wore on and the first noticeable change was that every time we fired someone for cause they sued us, and usually "won" because our lawyers explained that it was "cheaper to settle than fight, even though we might win".

4. Hand in hand with #3, we finally gave up on arguing with the State Unemployment people because no matter how bad a former employee was, they ALWAYS get unemployment benefits, resulting in an INCREASE in our unemployment tax rate.

5. Years ago, when we started our business, we paid for a permit to do business and paid our local, state, and federal taxes. We sent in the forms and paid.

6. Today, during the course of a year, one never knows who will show up at the door, unannounced, present a business card stating they are from government agency (local, state, fed) and informing you that they have the RIGHT to come in and walk through your business. If you argue, they threaten to call the police.

7. During the past 3 decades, more and more of the new-hires have "problems"; addictions, marital, domestic violence, child care, appointments with welfare agencies, you name it.

8. Today, many of the employees (mostly female) don't have male partners because they qualify for government benefits by NOT having a male in the household. As an employer, I had to put up with missed days of work because of appointments with government welfare offices.

SUMMARY: I don't need this aggravation. I, and many business owners I know, have completely restructured so that we operate without any, or very few, employees. It will be a cold day in hell before I would endure having staff again.

[Mouton]

You absolutely get it.

Had an HVAC guy in yesterday. His comments parallel yours exactly. Why hire more people and get bigger? HE DID NOT NEED THE AGGRAVATION as he put it.

I know for cohorts who recommended him he is honest, runs a good ship and actually is customer oriented. I was lucky I was able to find him.

[Kaslin]

You said it, but the only solution to prevent this, to make sure we get the majority back again so we can impeach that arrogant p o s

[Tolik]

The Obama administration’s tax-talking frenzy has left business owners feeling uncertain

Employers should feel confident and appreciated, not uncertain and threatened. This administration is good at promoting the latter.

 

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[Tolik]

Victor Davis Hanson:

Just a partial list: http://www.freerepublic.com/tag/victordavishanson/index:

Trashing the Job Makers. The Obama administration’s tax-talking frenzy has left business owners feeling uncertain

The Usual Straw Men. Obama’s half-hearted pivoting was quite transparent

As Predictable as Clockwork — the Obama three-step [Victor Davis Hanson continues to ridicule Zero]

Obama versus Obama (More classic VDH slapdown of the ONE)

Obama in Free Fall

Obama And Campaign Financing (Victor Davis Hanson On Obama's Hypocrisy Alert)

Post-election Thoughts (Liberals do not understand populist outrage. Bloodletting will Continue)

Our Philosopher-King Obama. He doesn’t mind pushing noble legislation that most people oppose

Why The Great And Growing Backlash? What Scott Brown’s election portends for the Obama agenda

"Let me be perfectly NOT clear" & "Make lots of MISTAKES about it" [Victor Davis Hanson on Obama's lies]

Our Sorta, Kinda War on Terror - President Obama has not signed up for a serious effort against radical Islam

Truths We Dare Not Speak. Five propositions that simply have become taboo

When Conservative Felonies Become Liberal Misdemeanors

2010: Our Year of Decision

Beating the Dead Terrorist Horse. September 11 taught us many lessons. To our peril, we have forgotten them

Bush Did It! And, Really, Bush Did It! And Bush Really Did It!

A Humpty-Dumpty View of the World

2009 Chickens and Their 2010 Roost

Where Did These Guys Come From? The Origins of Obamism

The War Against the Wannabe Rich. Why attack the productive classes who want to be rich?

The Long March From California to Copenhagen [Hanson on debate between capitalism and socialism]

The Palin Wonder

Why Are We Tiring of Obama?

Change, Weakness, Disaster, Obama: Answers from Victor Davis Hanson

If Iran Refuses To Cooperate, Block Its Ports

Resetting the Reset Button [Victor Davis Hanson dissects 0's pathetic diplomacy]

Riding the Back of the Tiger [Victor Davis Hanson on Obama not understanding What Causes Wars...]

What Bush Inherited, and What He Left Left Behind

Who Are ‘They’? To Obama, “they” are responsible for all our troubles. Problem is, “they” are most of us

Afghan Mythologies. We have everything we need to defeat the Taliban.

The Discreet Charm of the Left-wing Plutocracy

Truman and the Principles of U.S. Foreign Policy. Jimmy Carter rejected the postwar consensus. President Obama appears to be following a similar path

Dr. Barack and Mr. Obama - The backlash is sharp as voters learn that Obama is not the man they thought he was

Obama and "Redistributive Change". His real agenda

The War Against the Producers

President Palin’s First 100 Days. Imagine if Sarah Palin had Obama’s record

Thoughts About Depressed Americans

Our Battered American [gets angrier - Must Read Rant]

Just a partial list. Much more at the link:  http://www.freerepublic.com/tag/victordavishanson/index

[Madame Dufarge]

3. The years wore on and the first noticeable change was that every time we fired someone for cause they sued us, and usually "won" because our lawyers explained that it was "cheaper to settle than fight, even though we might win".

Along the same lines, a friend is the business manager for a manufacturing company in Massachusetts. As part of the employment process, they require all applicants to take an IQ test. We're not talking Mensa here, just basic math and English.

They've been threatened with "discrimination" lawsuits by more than one applicant who's flunked the test.

Who needs it?

[upcountryhorseman]

You are absolutely correct: he wants to destroy us in order
to institute socialism/communism. I think he will come up
with a way to retain power after he is voted out.

[marktwain]

I have been making the same points when I can.

[happygrl]

VDH's wisdom (and he is the first to acknowledge this) derives from his vocation as a farmer, not as an academic.

When, in the history of the republic, have we had so many advisors to the President with so little real-world experience ?

[Kaslin]

Indeed

[ProtectOurFreedom]

Re discrimination lawsuits, did you see the one in the UK a couple days ago?

"A job centre has been slammed for refusing to display an advert for a 'reliable workers' - because it discriminated against unreliable applicants."

Details here

Probably not too far in our future in the U.S., I fear.

[monkeyshine]

You’ve got that exactly right. I split my business into 2 entities simply to protect the intangible assets from the tangible ones. While that seems backwards (I mean, most people try to protect their tangible assets) the point is what makes my business money are the customers, the trademarks, the products and designs. I don’t NEED to make them myself. And I don’t NEED to make them in California. So I am now set up such that if I ever get fed up, I can shut down my production facility and re-open it in any of the other 47 continental states, or I could simply outsource the production to some other entity. The trademarks, customers, products and designs are still mine, and while they are not the heavy assets they also can’t be taken away, fined, shut down, inspected, audited, burned, flooded, locked out, on strike etc etc etc.

It’s like the old tycoons made their fortunes in rail, steel, oil and gas... now the tycoons make money out of electrons while the heavy equipment people are practically liabilities (like GM or the Railroads or trucking companies). They cost too much; they are too cumbersome; they are hard to liquidate; they are hard to operate; they require lots of people doing hard, sweaty, dangerous work; and when they lose they lose big, etc etc.

It is truly sad - this is why manufacturing is dead in the USA. You nailed it, and I, as a manufacturer, understand it all too well. I want to continue, but it has become markedly more difficult in recent years than 20 years ago. I can’t even begin to tell you how many different licenses, permits and fees I have to pay for every year. I need a permit for a boiler, I need permits for every one of my pieces of equipment... it would be like a shopkeeper having to have a permit for every display in his store. I have to pay for the privilege of using the equipment that makes the products that employ my employees. It’s beyond asinine.

[Madame Dufarge]

Probably not too far in our future in the U.S., I fear.

I share your fear. These are actually the "green ($) shoots" the libs are aiming for.

[Happyinmygarden]

Thank you for sharing. You can only imagine how much I can relate to your story!

In addition to laying off all staff last year, and completely changing the business model, we also divested of our several large, hard assets. In the same manner you described (i.e. new business model), we are now on a track to DOUBLE our business this year WITHOUT any staff. I will NEVER again take on the liability of staff because I am determined not to!

Like you, we have strategies in place to shift quickly from the left foot to the right foot, so to speak.

I have been saying for decades that what the gov’mint types simply don’t understand is that those of us who are entrepreneurs have in our DNA the ability to adjust to changing times. The liberals and gov’mint types (DEMS and REPUBS) make all their decisions based on the belief that nothing will change; that they can make assumptions that the future will remain like the present. They are wrong.

You are exactly correct; there is enormous value in the intangibles.

Years ago I attended a weekend intensive class for CEO’s, taught by Peter Drucker. I’ll never forget what he said:

“It isn’t manufacturing jobs or products that are our most valuable export. The most valuable export of the U.S. can be folded into a small piece of paper and travel in the breast pocket of a coat. It’s our ingenuity and our management skills. Those are the most valuable exports that the U.S. has and the ‘product’ in which the rest of the world is very much interested.”

He was so right.