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Obama’s Recession and His Job Destroying Agenda

By: Steve Johnson

11/13/2009 - 36 Comments

As the unemployment rate crossed double digits, the Obama administration cannot seem to figure out why the economy isn’t creating jobs.

To address the issue, President Obama announced that he will hold a ‘jobs summit’ next week to finally get to the bottom of this problem and find a solution.  He has assigned some of his top advisors to gather research and propose solutions.

Here are a few comments for Peter Schiff’s article today,

“That's a relief; for a while there, I thought we were in real trouble! In fact, the absolute last thing our economy needs is more federal government interference. If Obama really wants to know what's behind entrenched joblessness, he should start by looking at the man in the mirror.”

“Obama is pursuing, with unprecedented vigor, the same policies that have for decades undermined our industrial base and yoked us to an unsustainable consumer/credit driven economy. This doubling down on Washington's past failures is destroying jobs at an alarming rate. Today we learned that the September trade deficit surged by 18.2%, the largest gain in ten years. Much of the deficit resulted from Americans spending Cash-for-Clunkers stimulus money on imported cars – or “American” cars loaded to the sunroof with imported parts. In exchange for more domestic debt, we have succeeded only in creating foreign jobs.”

To really fix the problem;

“To really fix the unemployment problem, the President must look past his peers in government and academia to understand how jobs are actually created. In the private sector, all individuals have a choice to either work for themselves or someone else. Since labor is far more productive when combined with capital (office equipment, machinery, business models, and intellectual capital), those who lack these assets themselves often choose to work for others who have sacrificed to accumulate them. This increased productivity is shared between the worker and the owner of capital, and both are better off.

However, for one person or company to choose to offer a job to another, there must be an incentive to do so, and they must have the necessary capital. In the first place, employers must commit to paying wages and benefits, comply with government mandates and regulations, and subject themselves to potential lawsuits from disgruntled employees. All of these costs must be measured against the extra profits an employer hopes to earn by hiring an additional worker.

If profit opportunities exist, jobs will be created. Otherwise, they will not. Of course, anything the government does to raise the cost of employment, such as a higher minimum wage, mandated health care, or greater regulatory burdens, not only prevents new jobs from being created but also causes many that already exist to be destroyed. Anything that diminishes the profit potential of extra hiring will diminish the number of job opportunities that are created. Also, since it is after-tax profits against which employers measure risk, the higher the marginal rate of income tax, the less likely employers will be able to hire.

Finally, in order to hire workers, employers must have access to capital to expand operations. Anything the government does to discourage capital formation automatically diminishes job creation. By running the largest federal deficits in history, Barack Obama is diverting all available capital to the Treasury, and is in effect waging a war against private capital formation.”

As Peter said, Obama’s liberal social agenda is in effect waging war against capital formation.  Capital is fleeing the country and taking jobs with it.  The last decade of government overspending is the reason behind the recession that we are in.

Obama is the exact opposite person that the country should have elected.  He fooled the nation by promising the ‘change we need’ and delivered 10x of ‘more of the same’ spending that got us the second largest recession is history.

We really need change, but it’s not a bigger spender that we need.  We need a free market economist to drastically cut the budget and save the nation from the pending currency crisis.  The daily record price of gold should be a clear sign that the dollar is in big trouble.

Jobs come from Enteprenuers, like me who take calculated risks that are in their favor.  In the current environment, their are very few ways to make a profit - until the government gets their hands out of the economy.

Here is part of an article I wrote last month;

"Until the government stops flooding the market with money, it’s very difficult to determine which industries are phony and which are real. What are consumers going to purchase after the government stops printing money? 

If an entrepreneur builds’ a business today, for example a construction business based on the high demand to rebuild the roads the bridges, the entire business is bases on government stimulus money. The owners of the business are completely at the mercy of the government’s willingness to continue to borrow and spend money on rebuilding the roads and bridges. 

This is not a good business model because it does not depend on the free market and therefore the business owners cannot control the risk of loss to their business.

Therefore, small businesses are not able to see which industry is going to be viable in the future, because they cannot control which industry the government continues to create competitive advantages for with policies and easy money. 

Government policy is the biggest risk. If the government was not part of the risk, it would be much easier for a business to manage the risks that they need to take. 

Risk management is a large part of the decision that small business owners are constantly planning for and government intervention in the economy drastically increase their uncontrollable risks. "

Government central planning of the economy undermines the ability of the free market to support itself. The free market is not capable of creating jobs without economic freedom.  The more the government reduces economic freedom, the fewer jobs will result.  That's why government stimulus packages never work and why the bigger they are the more damage they cause - and the last one was a real doozey.

The real economic recovery will start with a change in government monetary policy, perhaps within the next six months. 

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