Why Businesses Aren’t Hiring, And Why The Government Can’t Do Anything About It

Any politician telling you that solving our problems will be easy is lying to you.

David Frum’s column today at CNN deals with the issue of why the jobs recession has been so deep and persistent, and why businesses seem so reluctant to resume hiring despite the fact that they’ve been doing rather well financially:

1. This past recession delivered its hardest blow to some especially labor-intensive industries: construction and retailing. Even as economic activity recovers, we’re not going to see lots of new home building. Nor will we see people using their cash-out refinancings to go shopping at Best Buy. Americans are saving again. Those who have jobs are paying down debt.

2. Recessions lead to consolidations. Weak firms go broke, strong firms gain market share. The strong firms hire, the weak firms fire. But because the strong firms are more productive (that’s why they are strong!), they do not hire nearly as many people as the weak firms have laid off.

3. A catastrophic experience like the 2008-2009 recession changes an employer’s expectations about the future. Caution and self-protection become the guiding rules of business management. Companies decide it’s safer to have one worker too few than one too many. They may not recover their exuberance and optimism for years.

4. Last and most important: The economy, although growing, is not growing very fast. The rule of thumb is to reduce unemployment by 1 point, the economy must grow 2 points over trend. Right now, the U.S. economy is still growing below trend. The engine is just not revving fast enough to move the car.

None of these strike me as being factors that can easily be influenced by government policy. The construction industry is slumping largely because of the collapse of the housing bubble, a bubble that has yet to fully liquidate itself. Retail is down because the economy as a whole is down and Americans are less reluctant to buy on credit than they used to be. The consolidations that were caused by business failures are a natural outgrowth of recessions. Employer psychology is something that no government is going to be able to influence very easily. And, finally, we’ve seen quite starkly since 2009 that the economic slump we’re in right now is stubbornly immune to traditional efforts at government stiimulus.

In other words, there’s very little that government can do in the short term to fix the economy, and the political consequences of that fact are bad news for every incumbent:

Step back from events this month, this year or even this decade, and a more ominous portrait comes into focus.

It shows an American economy under ever-increasing competitive pressure, demographic trends making those pressures more acute and a voting public facing repeated disappointment as it yearns for better times.

That disappointment may represent the long-term political consequence of a financial crisis and recession that has forced the nation to finally come to terms with its economic vulnerability.

For a generation, “our economy has been, for the majority of people, a slow-growth economy,” said Robert D. Reischauer, who was the director of the Congressional Budget Office in the early 1990s. “But our standards of living have improved much more, due to some factors that can’t and won’t be repeated.”

Republicans felt the voters’ wrath in 2008, as Democrats did last year. There is no sign of a Morning in America in 2012, or anytime soon.

“We’re going to see turbulence” in more elections, Mr. Reischauer concluded. “It’s a very grim picture.”

For the most part, the message that succeeds in American politics has been one of optimism. It’s the reason Ronald Reagan won in 1980 and 1984, why Bill Clinton won in 1992 and 1996, and why Barack Obama won in 2008. It’s understandable why this would be the case, of course. People don’t like to hear bad news from their political leaders to begin with, and a politician that talks about a bright new future, or harkens back to a past that probably wasn’t really as rosy as people think it was, is always going to beat a candidate with a gloomier message that concentrates on the sacrifices we’ll all have to make to fix our problems. Just ask Walter Mondale.

The problem for politicians, and for the American people, is that we are arguably heading into an era where there’s more likely to be more pain than a sudden cure for all our problems. It’s a time that calls for politicians to be honest with their constituents and make clear to them that there are no easy answers, and that maybe things aren’t going to get better for awhile. Instead what we get is simplistic pandering from the left and the right. Cut taxes, the Tea Party tells us, and all will be fine. Tax the rich, the left claims, and all our budget problems will be solved. Reality lies somewhere in between, along with the admission that “fine” could be many years away.

We are at a point right now where we all need to be honest with each other, instead we just keep repeating the same old partisan lies.

 

FILED UNDER: *FEATURED, Economics and Business, Taxes, Tea Party, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. BigFire says:

    It’s call Capital Strike. Atlas have already shrugged.

  2. ponce says:

    Of course the government could “do something” about it.

    A 25% tax on corporate cash reserves that could be avoided by hiring enough new workers would do the trick.

  3. Jeff says:

    the government may not be able to jumpstart the economy but it certainly can dampen any recovery with excessive regulation, taxes and moratoriums … 2% growth = stalled, 3% growth = recovery …

  4. Jeff says:

    @ponce: isn’t that called theft in polite company ? that money has already been taxed once at 35% …

  5. SER says:

    @ponce:

    Isn’t that theft? Or does that matter to you?

  6. Jay Tea says:

    Toss in another factor: the rising expense of labor. Between the raising of the minimum wage and the costs of ObamaCare, companies are re-evaluating what new hires are worth. Purely based on salary, a company could hire 4 workers at $5.45 an hour for roughly the same price it can hire 3 at $7.25 an hour.

    Toss in the high unemployment, and employers can ask more of workers, too.

    J.

  7. OzarkHillbilly says:

    @Jeff:

    isn’t that called theft in polite company ? that money has already been taxed once at 35% …

    10,000 unemployed comedians in the world and here Jeff is giving it away for free.

  8. Rob in CT says:

    Jeff,

    Care to offer specifics about those “excessive” regulations, taxes, and moratoriums (this I assume is about the Gulf drilling thing?)?

    In the world I inhabit, there have been repeated tax cuts, extensions of those cuts, plus additional temporary payroll tax cuts (attempted stimulus), not “excessive” taxes.

    I keep hearing, from Conservatives, about awful recovery-halting regulations. What would those be, exactly? Are we talking about Frank-Dodd here?

    As for the drilling moratorium: a) it’s over now; b) while I wasn’t in favor of the moratorium, there was a high-profile accident down there, so it’s understandable; and c) no way a temporary halt to drilling in a specific location caused much harm to the economy. A little at the margins? Possibly.

  9. Jay Tea says:

    @Jeff: As long as it’s not in government hands, then it can be taxed and re-taxed and taxed yet again. Look at the inheritance tax — the deceased paid taxes on it when they got it, and again when they want to pass it along.

    Of course, the good liberals don’t bother with that, they have trusts and whatnot — that’s how the Kennedys keep their family fortune (lord knows none of them has actually contributed to it in at least half a century), how John Kerry got his fortune (it’s his second wife’s first husband’s family’s money), the Rockefellers…

    J.

  10. WR says:

    @Jeff: I don’t know. Is liquidating pension funds and distributing the cash to stockholders “theft”? Is slashing employee benefits to give top executives multi-million dollar raises “theft”? Is forcing employees to work off the clock for free or get fired “theft”?

    Oh, no, of course not. Theft is when rich people are inconvenienced. Stealing money from working people is called “freedom.” Or as Doug M likes to call it, “the wonder and beauty of the market.”

  11. OzarkHillbilly says:

    @SER:

    Isn’t that theft? Or does that matter to you?

    While I disagree with Ponces idea, I do have to point out that no, in fact it is not theft. It is taxation.

    And if one can not tell the difference, than you certainly don’t have anything intelligent to add to the conversation.

  12. Rob in CT says:

    “Look at the inheritance tax — the deceased paid taxes on it when they got it, and again when they want to pass it along”

    Heh. The person inheriting the money, who most likely did nothing to help earn it, should receive it tax-free, amiright? Of course! Why not allow the unchecked concentration of wealth? What could go wrong? Our estate tax is rather weak, really (the exemption has fluctuated, IIRC, between $1M and $5M recently. Above that the rate is 35%, if memory serves). Pointing to loopholes/exemptions in it doesn’t strengthen your argument.

    You’re arguing for aristocracy, calling it liberty.

  13. Boyd says:

    It’s a time that calls for politicians to be honest with their constituents and make clear to them that there are no easy answers, and that maybe things aren’t going to get better for awhile.

    But earlier, Doug, you said

    For the most part, the message that succeeds in American politics has been one of optimism.

    So, reality being mostly doom and gloom, the realistic politician is going to get booted by the voters. It seems to me that the optimistic path to recovery is the one that will win the day.

    While I don’t claim to have any idea what that “optimistic path to recovery” is, but the successful political path at this point definitely isn’t based in self-discipline and self-denial. The voters don’t want to hear it.

  14. OzarkHillbilly says:

    @Jay Tea:

    Look at the inheritance tax — the deceased paid taxes on it when they got it, and again when they want to pass it along.

    So much stupid in one sentence: Jay, the person getting taxed is not the deceased, it is the inheritor. And I for one can see no good reason for somebody to get a bunch of money that they did not earn, tax free.

  15. Gustopher says:

    Corporate profits are way up, as is unemployment. The tax system could be used to make it more expensive to hold onto profits than to reinvest them into the company, which would encourage more employment. I think that’s a rather dangerous approach, and might have a whole lot of unintended consequences.

    Or we could take advantage of record low interest rates, massive amounts of deferred maintenance on infrastructure, and go for a stimulus program that isn’t 50% tax breaks on businesses, along with a plausible plan to pay for this stimulus 5 years down the road.

    Or we could do nothing, and destroy families by creating a class of permanently unemployed, all while watching our infrastructure crumble.

    Alas, as a nation we have chosen the third option.

  16. EddieInCA says:

    Cut Taxes.

    That will create jobs.

    Cut regulations and red tape.

    That will create jobs.

    Cut the corporate tax rate to zero.

    That will create jobs.

    Cut the capital gains tax rate to zero.

    That will create jobs.

    /end snark

  17. Jay Tea says:

    @OzarkHillbilly: No, the money is being taxed. The money was taxed when it was earned, and now the same money is being taxed when it is being passed on.

    J.

  18. Jay Tea says:

    @Rob in CT: So, I trust you have some serious resentment towards the Kennedys, the Rockefellers, and John Kerry?

    If you’d like more examples of trust fund Democrats, I’ll be happy to provide.

    J.

  19. jan says:

    @EddieInCA:

    Hey Eddie,

    You’re finally catching on! Congratulations!

  20. Moosebreath says:

    “No, the money is being taxed. The money was taxed when it was earned, and now the same money is being taxed when it is being passed on.”

    And when the money changes hands between a buyer and seller of a good, and the buyer pays sales tax on it, it is being taxed again. And when an employer pays wage taxes using the same money, it is taxed yet again. It’s almost like they are treated as separate transactions or something.

  21. An Interested Party says:

    So, I trust you have some serious resentment towards the Kennedys, the Rockefellers, and John Kerry?

    Funny how taxation of the wealthy is considered “resentment” by some people…along those same lines, people who don’t like unions or government workers have resentment that they should seek help to overcome…

    You’re finally catching on! Congratulations!

    Could you provide any proof that all those things really create jobs…

  22. OzarkHillbilly says:

    @Jay Tea:

    No, the money is being taxed.

    Outside of the fact that your last post said the deceased was getting taxed twice, have you ever seen a dollar bill fill out a 1040?

    Jay, I did not think you could top your last post but you proved me wrong.

  23. WR says:

    @Jay Tea: I’ve never seen the Kerrys or the Kennedys argue that their taxes should be lowered. In fact, I’ve seen them vote for higher taxes on the wealthy. So what’s your point? If it’s that liberals hate the rich, and therefore must hate the Kennedys, obviously that’s just moronic, since no one has said any such thing. So what is it?

  24. Jay Tea says:

    @OzarkHillbilly: Let’s see… would that 1040 be a income tax form?

    I’m not being taxed, my income is. The tax is based not on me or anything about me as a person, but my income.

    And let’s close those loopholes on trust funds, shall we? I remember laughing when the left brought up the “Paris Hilton” tax — the Hiltons don’t pay any inheritance tax anyway. They use trust funds to get around it.

    Or, as in the case of Rose Kennedy, Teddy had her declared a resident of Florida to get out of Massachusetts’ inheritance tax — never mind that she hadn’t left her Massachusetts home in a dozen years before her death, let alone set foot in Florida.

    J.

  25. JKB says:

    Well, the socialist are running rampant here. Corporations have property, cash reserves, why not just take it. Forget the whole Constitution and the need for due process of law to deprive someone of their property. Forget the idea that government theft is still theft. The taking of property held in cash is no different than taking property held in real estate, or machinery or buildings. But then the Progressives as well displayed here, don’t like this idea of private property unless the property is theirs.

    But let’s look at the practical impact of this taking of property. Practically, the cash reserves would disappear, overseas, into machinery,etc. But unlikely into labor as, labor is a continuing cost that would still need to be met when the cash reserves were depleted.

    But let’s say the corporations can’t use the money for their benefit or return it to the stockholders. Well, when it comes time to pay that “tax” they are going to sell those cash-equivalents the money is held in to pay the tribute. Some of that will be in government bonds, some in bonds of other companies. But what we do know, is suddenly there will be a big run to cash out the bonds, sending bond prices into the toilet and the cost of borrowing for government and other firms that might like to expand, through the roof.

    Good job, Progressives, you’ve now, crashed the entire worldwide economy. Upside, lots of poor starving homeless people. Downside, you’re still around and probably doing pretty well with your “connections” with the thieving government.

  26. legion says:

    @Jay Tea: I don’t know if we can put this into any smaller words for you, man.

    When you make money, it’s income, and it gets taxed.
    When you die, that money stops being yours.
    When someone inherits that money, it’s income to them, and gets taxed.

    The concepts don’t get much more basic than that. Try to keep up. It only get trickier from here.

  27. OzarkHillbilly says:

    And let’s close those loopholes on trust funds, shall we? I remember laughing when the left brought up the “Paris Hilton” tax — the Hiltons don’t pay any inheritance tax anyway. They use trust funds to get around it.

    So let me see if I have this straight Jay:

    The inheritance tax is a tax on stupid rich people…..And you are against that? Jay, at what point do you read yourself? Just 2 or 3 posts ago this was thievery. Now it is something that anyone with a good tax accountant can easily get around. You are a caricature… and you leave me almost speechless (don’t worry, I have plenty of breath left to point out the utter idiocy of your ever changing positions).

    Jay, take a stand, any stand, and I’ll bet I can get you to change it within 24 hrs

  28. Jay Tea says:

    @OzarkHillbilly: Ozark, what happened was I let myself get distracted from the subject at hand — just why businesses aren’t hiring. Let me go back and see just where the hell it went off the track…

    Oh, yeah, the whole idea of how many times money can be taxed. An amusing diversion, but not overly germane here. My apologies.

    So, how about what I said that was on topic — the jacking up of the minimum wage and ObamaCare. A lot of us predicted that they’d both drive up unemployment, and we were mocked and laughed at. I guess it was just a wild coincidence that we were right.

    A lot of us made a LOT of predictions about what would happen if Obama got elected, and a lot of those are turning out to have been — if anything — optimistic.

    Personally, I wish I would have been wrong. But Obama’s proving even worse than I had feared.

    J.

  29. OzarkHillbilly says:

    Jay, take a stand, any stand, and I’ll bet I can get you to change it within 24 hrs

    Or make you look like a complete idiot. A low bar, I’ll admit, but one you have set

  30. OzarkHillbilly says:

    @Jay Tea:

    Ozark, what happened was I let myself get distracted from the subject at hand

    Jay, I repeat, you are a moving target. Take a stand, any stand, and I’ll bet I can get you to change it. within 24 hrs.

    The ball is in your court.

  31. David M says:

    How on earth can the ACA already be negatively affecting employment? There’s a lot of asinine blog comments each day, but that seriously takes the cake.

  32. Gerry W. says:

    @Jay Tea:

    So, how about what I said that was on topic — the jacking up of the minimum wage and ObamaCare. A lot of us predicted that they’d both drive up unemployment, and we were mocked and laughed at. I guess it was just a wild coincidence that we were right.

    This emphasis is a little overbearing. Basically what you are saying is that people should be paid a dollar an hour. It seems to be the going rate overseas. You can gripe all you want on wages, but the fact remains, that after the fall of communism, some 2 billion cheap laborers have entered the free market system and that in itself mean loss of jobs and wages for the middle class. (by the way, you never have talked about preserving the middle class as we knew it)

    Yes, we see the democrats spending, the republicans saying more tax cuts on top of the Bush tax cuts, and the fed printing more money for low interest rates and a low dollar so that we can export more with 1/3 less manufacturing. And none of that is working. All of that stimulus is ineffective as it has been used over and over again and not dealing with the problems.

    But we also have seen the similarities of the roaring 20’s and the Bush administration. Bush partied and now we face another recession or a depression. Yeah, all that stimulus of tax cuts and low interest rates don’t mean a hill of beans if you don’t fix the problems at home. And one of our biggest problems is globalization and 2 billion cheap laborers and we have lost some 57,000 factories or 6 million jobs over a decade. And you cannot get that back again.

    Of course all the pundits, all the economists, and all the globalists have said years ago that we were going to be an information society and/or a service society. And I ask, where are the jobs?They are the ones who are running the show, and now they say. “well, we don’t want to produce the low end merchandise and we will pay attention to building the high end stuff.” What a crock. Anything can happen in this world and nothing is written in stone. They don’t know anymore than democrats or republicans in how to run a country with globalization at hand.

    The problem is that you don’t give up 6 million jobs, and if you are going to do that, then you better invest in your country, in your people, and in the future instead of failed ideologies. And now we know what Roosevelt was up against. Because if you don’t have a private economy, then what do you do?

    And by the way, the Chinese are getting paid too much and will be replaced by robots. The fact remains is that there are too many people for too few jobs. With the world opened up, it is the race to the bottom on pricing products and cheap labor.
    http://news.xinhuanet.com/english2010/china/2011-07/30/c_131018764.htm

  33. OzarkHillbilly says:

    So, how about what I said that was on topic — the jacking up of the minimum wage and ObamaCare. A lot of us predicted that they’d both drive up unemployment, and we were mocked and laughed at. I guess it was just a wild coincidence that we were right.

    How about a cite or 2? The rooster crows at dawn. Is it because the the sun rises? Or does the roosters crowing make the sun rise?

    Jay, this is too easy. I suggest you take your toys and go home

    .

    A lot of us made a LOT of predictions about what would happen if Obama got elected, and a lot of those are turning out to have been — if anything — optimistic.

    Personally, I wish I would have been wrong. But Obama’s proving even worse than I had feared.

    Soooo…… when Mitch McConnell stated that all he wanted was for Obama to fail, you voted against every Republican???????

    Tell me that last statement is correct and I will call you a lying sack of sh*t

  34. ratufa says:

    @Jay Tea:

    I’m not being taxed, my income is. The tax is based not on me or anything about me as a person, but my income.

    Are you saying that the amount of tax you pay is not affected by things other than your income, such as marital status, number of dependents, whether or not you’re paying off a mortgage, and so on?

  35. Ben Wolf says:

    @Gerry W.: There’s also the total lack of empirical evidence that minimum wage laws increase unemployment. But I’m sure someone will be posting a quote from Commentary or the works of an austrian insisting that the minimum wage killed Jesus, so shut up and stop talking about evidence.

  36. OzarkHillbilly says:

    @ratufa: well said.

  37. Stephen says:

    Minor nit: in the original post, “less reluctant to buy on credit” should be “more reluctant”.

  38. lunaticllama says:

    I don’t know what “left” you are talking about. Doug here trots an the old conservative straw man vision of what a liberal is. All people on the left have been saying the same thing for years: to get out of this downturn we need to increase aggregate demand. All the problems Frum lists are signs that aggregate demand is insufficient to the economic capacity of the U.S. We literally have millions of people doing nothing, which is a huge waste of human capital and shows our economy has a lot of excess capacity we could be putting towards the creation of wealth. Maybe, we should raise taxes due to changing demographics or because funding rich people’s consumption through issuance public debt is not desirable, but these are not the core economic argument of liberals by and large today. And certainly there are arguments about how to best increase aggregate demand, but, no, the only “left” saying that taxes must be raised to fix the economy is the “left” envisioned by conservatives who do not understand basic macroeconomics.

  39. WR says:

    @Jay Tea: The jacking up of the minimum wage?in 2009 it was reported that there were only four counties in the country where where a person working full time at a minimum wage job could afford rent and utilities for a one-bedroom apartment. How much would you like to lower the minimum? To five dollars an hour? One dollar? Or should we just wipe it out altogether and let multinational corporations set their payscales at a quarter an hour, keeping all the additional profits?

  40. WR says:

    @ratufa: Marital status? Dependents? You are talking about Jay Tea here, you know.

  41. anjin-san says:

    the subject at hand — just why businesses aren’t hiring.

    Hmm. I spend a lot of time every day talking to business people from managers to C level. I can’t remember even one of them saying “We want to do some hiring, but that damn Obama care has just made it too risky”. Or anything even remotely like it.

    Jay I have an idea how you can pass the time. Get a recording of the 70’s Knack hit “My Sharona”. Play it real loud. Sing along. Whenever they sing My Sharona”, scream “Blame Obama” at the top of your lungs.

    It may give your life some meaning, if that is even possible.

    Here’s a link. Take a test drive:

    http://www.youtube.com/watch?v=kVdnqEyToqg

  42. anjin-san says:

    Are you saying that the amount of tax you pay is not affected by things other than your income, such as marital status, number of dependents, whether or not you’re paying off a mortgage, and so on?

    Good question… Jay? Care to weigh in? Perhaps you got distracted again and did not notice you were spouting nonsense…

  43. The Colourfield says:

    “Good question… Jay? Care to weigh in? Perhaps you got distracted again and did not notice you were spouting nonsense…”

    That’s all he’s got.

  44. The Colourfield says:

    Tax the rich, the left claims, and all our budget problems will be solved

    Cite please, because that has no resemblance to reality

  45. Skippy says:

    @OzarkHillbilly: The difference is that one uses a ballot box and the government’s implicit use of force instead of the explicit use of a gun.

  46. Pete says:

    @OzarkHillbilly: Did the government EARN it????

  47. Dan says:

    If the Past Few Days Have You at Least a Little Worried… http://mittromneycentral.com/2011/08/08/obamas-horrible-no-good-day-romney-speaks-on-sp-downgrade/ is one of the most enlightening pieces I’ve ever seen. The future is uncertain, but we can have real hope because the more people that read this, the more people will see the light and know what we have to do to get back on track.

  48. anjin-san says:

    the more people that read this, the more people will see the light and know what we have to do to get back on track.

    Damn straight. They will know they should never vote for a Republican again. Got to love the part about how “Washington put us on the road to a downgrade”…

  49. A voice from another precinct says:

    @Ben Wolf: When I was teaching students to write research papers in college, I always had at least one student who wanted to write a paper arguing that the minimum wage should be lowered because increases in the minimum wage diminished employment by making businesses so unprofitable that the businesses failed. Normally, they were using Say’s Law as the foundation for their arguments. I always told my students that they could write their papers if the could find one business–anywhere in the world, and of any size whatsoever–that closed it doors because an increase in the minimum wage consumed the profits of the business to the extent that the owner could no longer afford to operate.

    I never got any papers on the virtues of lowering the minimum wage.

  50. A voice from another precinct says:

    Frum seems to be on point. The biggest reason that businesses aren’t hiring is ultimately because there is not enough business opportunity to warrant new hiring. People who own businesses hire because the believe that the employment will make profits in excess of costs–sometimes they are mistaken in their belief, but that is another case for a different day. If there’s no more money to be made, I have no need to hire anyone.

    Incedently, this phenomenon also explains why cutting the taxes of “the people who produce the wealth and employment in this country” also doesn’t work to increase employment. The notions that cutting the taxes of business people and entrepreneurs or lowering the minimum wage will stimulate hiring is just so much stuff of pipe dreams–and I want to buy a container load of whatever these geniuses are smoking because it is much better than the stuff that I can get in my hometown!

    Jay Tea, where do you buy? And how many bong hits a day are you taking?

  51. Pete says:

    @A voice from another precinct:

    The notions that cutting the taxes of business people and entrepreneurs or lowering the minimum wage will stimulate hiring is just so much stuff of pipe dreams

    Not sure that someone who teaches would really understand what business owners have to do in reality. Teachers are observers of business; not participants. You are correct regarding the minimum wage, but you are badly deceived regarding the tax assertion. Maybe you have been smoking bad weed too long and somehow imagine yourself an entrepreneur

  52. FAP says:

    @ponce: @ponce: So, you think that just because we’re in economic crisis our government should have the right to just tax a corporation because it has reserves? In other words, you believe the government should do whatever it can, irrespective of the bill of rights, as long as it benefits you. What sloppy thinking.

  53. Rob in CT says:

    @Jay Tea:

    Not resentment, Jay. I do think allowing great wealth to be consolidated in ever fewer hands is dangerous. I think it has deleterious effects on the country. Thus I support the estate tax, and would prefer to remove the ways of avoiding it. Noting “trust fund Democrats” doesn’t impact my argument at all, because I’m not arguing from resentment or tribalism. I’m arguing that a proper estate tax is good policy, because it provides a check on the accumulation of great wealth in the hands of a few, which is bad economically (see also: The Gilded Age) and socially (left-wing populism is marginal today in comparison to the 1930s, and the “great compression” and its lingering aftereffects, plus the Great Society, are a major part of that, as is the discrediting of communism, of course).

    As for this debate about businesses hiring, the minimum wage, taxes and regulation…

    I see no one has been able to point to tax increases, and of course no one can refute that taxes have actually been cut, repeatedly. As I expected, since that’s reality.

    I see no concrete discussion of the supposedly harmful new regulations that have been mentioned but not explained. Why is that? I see it mentioned often, yet I never see anyone drill down into specifics. What new regulation? What is it designed to do and how is it failing & impacting business? Anyone?

    As to the minimum wage, that one is more interesting. Theoretically, lowering it might result in a extra jobs at the extreme low-end of the payscale. Companies would still actually have to have a need for the added workers, of course, for that to work. If you allowed, say, $5/hr, you might pick up a few $5/hr jobs (and a bunch of $8/hr jobs would likely become $5/hr jobs), but I doubt many, at least not until demand picks back up (which likely won’t happen unless/until household debt is payed down). What it will not do is create a bunch of decent-paying jobs, which are the ones we’ve lost in this recession. So I don’t see that as a solution to the current problem, though I’m not ideologically set in my ways about the MW.

    That leaves “Obamacare” which mostly hasn’t kicked in yet. I can imagine companies being more hesitant to hire workers, particularly for decent-paying jobs w/benefits, due to concerns about rising healthcare costs. But healthcare costs have been skyrocketing for a long tim. The baseline scenario of no PPACA would still include rising healthcare costs. It’s unclear to me that the PPACA will increase the rate of increase. It’s pretty hard to say whether it will and, if so, how much, so there’s some uncertainty there, ok.

    We had a massive, massive bubble and it burst. The resulting financial panic was the worst we’ve had since 1929. The revised estimates of GDP contraction show that things were even worse than we thought:

    http://www.livetradingnews.com/how-the-recalculation-of-the-2007-2009-crisis-hurt-2-years-later-49508.htm

    This wasn’t a normal business cycle recession and, therefore, it hasn’t had a normal recovery. I’m not sure what the government can/will do at this point, but the usual tools (that have worked in more normal conditions in the past) haven’t worked. So now it’s either do nothing, or try something unusual. I bet on a whole lotta nothing until at least after the election.

  54. john personna says:

    Why Businesses Aren’t Hiring, And Why The Government Can’t Do Anything About It

    This is something I’ve been thinking about for a year. I think it comes down to the different kinds of “can’t.” There is the economic kind, that X never has the desired impact, and then there is the political kind, that X will never be tried.

    To me the economics of stimulus are arguable, but given that politically it is right of the table, we really know our answer.

    This is why I’ve been saying for a year or so, in these threads, that we’ll be trying austerity, and we’ll get to see first hand how it works out.

    My Guess: A 10 year recovery.

  55. sam says:

    @Jay Tea:

    I’m not being taxed, my income is. The tax is based not on me or anything about me as a person, but my income.

    Jay makes me smile sometimes.

    Well-Known Blogger Jailed for Attempted Tax Evasion

    Jay Tea, a prominent blogger, was arrested and jailed this afternoon when he attempted to pay his income tax with a check signed, “Jay Tea’s Income”. In his defense, Jay asserted that he is not being taxed, but his income is, therefore the income is responsible for paying the tax on itself, not him.

  56. An Interested Party says:

    In other words, you believe the government should do whatever it can, irrespective of the bill of rights, as long as it benefits you.

    Which part of the Bill of Rights conflicts with the government levying specific taxes on corporations?

  57. Eyeball Kid says:

    @Jay Tea:
    Jay, you really need to STFU about Rose Kennedy. The woman established residency in Palm Beach, Florida before you were born. She owned a home there until her death and lived in it for many, many years. She registered to vote there in October of 19-freakin-60 and continued to vote there until her stroke in 1984, at which point the family moved her to Ted’s home in Hyannis Port. Her Massachusetts death certificate lists her residence as Palm Beach.

    Residency for estate tax purposes does not solely hinge on physical presence as long as other criteria can clearly establish intent to reside in the state. Rose Kennedy met those criteria, and no nefarious intervention was made, or needed, by Ted Kennedy.

    So, take this lie back to Wizbang, where they believe your bs.

  58. Catfish says:

    Do away with Dodd – Frank.
    Eliminate 70% of government regulations – I know many of these are state or local, but in some places it takes over 100 permits (nothing but a tax) just to open a restaurant.
    The Obama Care has many businesses afraid to do any hiring.
    Do away with the capital gains tax.

  59. Gerry W. says:

    @Catfish:
    While some of what you say may be helpful, it does not come close to the 6 million jobs or 57,000 factories that closed up over a decade. It is all about cheap labor and with 2 billion cheap laborers in the free market system, it will be very hard to make products here when they can be made elsewhere. And restaurants and the like have a difficult time opening up when factories are closed in a community. You need employed clientele to do business with.

    Just telling you what life is like in areas where factories are closed over a decade. And no one running for president has come close in how to make up for those lost jobs and what will move us forward.

  60. Dave says:

    @ponce:

    Demand creates jobs. Taxes, up to a point, do not effect job creation. If a profit can be made by hiring employees to meet demand then they will be hired. Increasing demand by increasing the purchasing power of the economic base is within the ability f government. A simple 100 billion subsidy on the cost of diesel fuel would do the trick nicely. This would have a minimal effect on demand for diesel and drive down transportation costs making everything a lot cheaper. Cheaper products should translate into higher demand and a lot of hiring. The combination of increased revenue and decreased expenditure on unemployment and welfare will more than make up the cost of 100 billion.

  61. Gerry W. says:

    @Dave:

    I don’t quite get this. We are going to subsidize diesel fuel (our tax money) so that products will be bought cheaper (half of which will be foreign goods) and that will create jobs.

    It says nothing at the closed factories that I am looking at. Now, as people read what I say, I don’t expect things to be the same as before and I don’t expect the factories to reopen. However, whatever ideas are out there, it falls way short of what we have to do. We need new areas of growth. I don’t know what they are and that means new investment in research and infrastructure. Even then, with a globalized world, a widget can be made anywhere. Even if there is demand for a product we have to account for 2 billion cheap laborers, automation, lean principles, and mergers and consolidation. A daunting task to increase employment that is next to impossible.

  62. terry davis says:

    why are people allowed to hoard money why does one person need a billion dollars maybe there should be a hoarders tax on money economic stimulous isn’t that what they called it money they passed out to get our economy going how much did they pass out about a trillion dollars i don’t about you but as i recall i got 300 dollars and laid off of my construction job how stimulating is that there is roughly 350,000,000 people in the U.S.A. where is the rest of our share are we not americans wasn’t that american money we didn’t cause this problem no the money went to those who caused this problem does that stimulate you they got slapped on the wrist and told not to do it again every one knows greed and power caused this problem im tired of hearing it was the reps.or the dems it was both i say get rid of them all and start over no more lobbying or payoffs end the corruption now i mean i had to pay $1,600 on $19,000 of unemployment and i hear some greedy oil company that made billions paid zero and got a 750,000,000 refund yeah who allowed that to happen

  63. terry davis says:

    @Gerry W.: did they close or move to another country to avoid paying thier fair share or to take advantage of some loophole that would increase their greedy profits

  64. Roger says:

    Governments can not create jobs except when they do the hiring themselves. They can however do things to encourage job growth by using incentives. But, even then, those jobs will only last as long as the business needs them or until the incentive goes away.
    Any real job growth comes from new business. Usually in the form of some new thing being created. A most recent example being the internet and the new businesses coming about through it(Ebay,Amazon, etc). Without a new “thing”, there will be no new business and no real upswing in hiring. Anywhere.
    Gerry W. has it pegged correctly. When manufacturing started leaving the US, so did the mid-level paying jobs. Anyone without a degree is not going to get anything much above roughly $15/hr. Noone can really live on that. Dependant upon their location of course. Manufacturing jobs were, for the most part, in the $15-30 range. Something a person could live on and even raise a family. Even with a degree, there are few jobs available in a given field. That heightened competition for jobs lowers a companies need to pay more. Add in the machines doing jobs that used to be done by people and fewer workers are needed. Simple as that.Could we bring those manufacturing jobs back to the US? Sure. With major changes in taxes, tarifs, etc. That was called isolationism. You think a lot of other countries hate us now? Give that a try.
    It doesn’t look good for anyone out of work. I believe many will never work again. Certainly not in the field they want.
    Sorry to say this to many of you, but government can not fix everything.

  65. Wlarue says:

    @JKB:

    The root problems here are hardly the stepchildren of the “Progressives” (couldn’t you think up a more derogatory term?). The core issue is that corporations have done all in their power to shift from actually growing their companies to “returning maximum value to the shareholders”. Emphasis on “maximum”. The latest wrinkle in this scam is the shipment of jobs to third world countries where wages are much lower and profits garnered are untaxed in the US (and please, don’t try the old “but they are taxed in the other country” ploy, balance sheets show exactly what is happening with this tax dodge). As evidence, the latest tally is 3 million jobs lost to layoff in the US coupled with 2.94 million jobs created overseas. Coincidence? I think not.

    One can make the argument that this is just using the lowest priced labor, but the real problem is that the increased profits are being sent directly to shareholders, who are by and large major investment firms. The management of the company still sits here in the U.S., protected by the federal, state and local governments, while the company pays nothing for this service.

    We all sit and wonder what’s wrong, point fingers at this group or that, and attack each other for not being worthy of “our piece of the pie” while the major players in this scandalous affair walk away unblemished. Anyone care for a wakeup call?