John Stossel
Where Are the New Jobs?
"Corporate profits are soaring. Companies are sitting on billions of dollars of cash. And still, they've yet to amp up hiring or make major investments."
So writes The Washington Post about the recession's stubborn refusal to go away. The statisticians at the National Bureau of Economic Research declared the Great Recession over -- but tell that to people who can't find jobs. Today, businesses replace equipment and inventory, but they are reluctant to hire new workers. Investment that does occur aims at replacing the use of labor by adopting advanced technology. In a growing economy, that's a sign of progress. Freed-up workers are then available for new projects. But lately, those new projects aren't being launched.
The two wings of the establishment offer their usual remedies. Government-oriented types want more tax-financed "stimulus" spending, claiming last year's nearly trillion-dollar dose wasn't enough. That's dubious. As economist Mark Skousen writes, "(P)roduction and investment lead the economy into and out of a recession; retail demand is the most stable component of economic activity."
Business-oriented types want tax cuts. I'm sympathetic, but cuts should be accompanied by spending cuts, or the deficit will grow even uglier. There's no free lunch. Deficit spending must be covered by government borrowing, which takes capital that could be used for investment out of the private sector.
Why isn't the economy recovering? After previous recessions, unemployment didn't get stuck at close to 10 percent. If left alone, the economy can and does heal itself, as the mistakes of the previous inflationary boom are corrected.
The problem today is that the economy is not being left alone. Instead, it is haunted by uncertainty on a hundred fronts. When rules are unintelligible and unpredictable, when new workers are potential threats because of Labor Department regulations, businesses have little confidence to hire. President Obama's vaunted legislative record not only left entrepreneurs with the burden of bigger government, it also makes it impossible for them to accurately estimate the new burden.
In at least three big areas -- health insurance, financial regulation and taxes -- no one can know what will happen.
New intrusive rules for health insurance are yet to be written, and those rules will affect hiring, since most health insurance is provided by employers.
Thanks to the new 2,300 page Dodd-Frank finance regulatory act, The Wall Street Journal reports, there will be "no fewer than 243 new formal rule-makings by 11 different federal agencies." These as-yet unknown rules will govern lending to business and other key financial activity.
The George W. Bush tax cuts (SET ITAL) might (END ITAL) be allowed to expire. But maybe not. Social Security and Medicare are dangerously shaky. Will Congress raise the payroll tax? A "distinguished" deficit commission is meeting. What will it do? Recommend a value-added tax?
Who knows? But few employers will commit to a big investment with those clouds hanging over our heads.
"As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company's vulnerability to government," Michael Fleischer, president of Bogen Communications Inc., wrote in The Wall Street Journal.
Nothing more effectively freezes business in place than what economist and historian Robert Higgs calls "regime uncertainty."
"(A)ll of these unsettling possibilities and others of substantial significance must give pause to anyone considering a long-term investment, because any one of them has the potential to turn what seems to be a profitable investment into a big loser. In short, investors now face regime uncertainty to an extent that few have experienced in this country -- to find anything comparable, one must go back to the 1930s and 1940s, when the menacing clouds of the New Deal and World War II darkened the economic horizon."
Uncertainty created by Obama's legislative "successes" are comparable to the Depression and World War II? This does not bode well for job growth.
Higgs says: "Unless the government acts soon to resolve the looming uncertainties about the half-dozen greatest threats of policy harm to business, investors will remain for the most part on the sideline ... consuming wealth that might otherwise have been invested."
John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and of "Myth, Lies, and Downright Stupidity."
COPYRIGHT 2010 BY JFS PRODUCTIONS, INC.
Entrepreneurship Helps Make America Great
For all its problems, America is a great place. And one thing that makes America great is its prosperity. Yes, some people have suffered during the recession — but compared to all the other countries in the history of the world, America is rich. Why?
One reason is that America is a good place to do business.
Dinesh D'Souza, author of "What's So Great about America," points out: "In most other societies, the businessman has been looked down upon. He's been seen as a kind of sleazy guy. But then American founders specifically put protection for patents and trademarks in the Constitution.
And suddenly, the entrepreneur is taken from the bottom of the heap and brought to the front."
Today, Asian students crush Americans on standardized tests, but it's Americans who invent things like the transistor and the integrated circuit and go on to win disproportionate numbers of Nobel Prizes. Our culture of entrepreneurship turns that science into wealth.
TV pitchman Anthony Sullivan is from Britain, but he says his business didn't thrive there.
"I found in England if there's 10 reasons you could do something, there's 20 reasons why you couldn't do it, you shouldn't do it, " says Sullivan. "I found in the States that people will give you a shot."
One sign of this attitude is that it's relatively easy to start a business here. I opened one in Wilmington, Del. I named it the Stossel Store. It was just a table from which I pitched my "Give Me a Break" book and Fox merchandise. I picked Wilmington because our research showed that Delaware and Nevada make opening a business easier than other states. It still took me a week to get legal permission, but it would have taken much longer in Europe.
"I have started businesses in the U.K. and India. It takes at least a month or more just to open doors," A.J. Khubani, president of TeleBrands, says.
Unfortunately, bureaucrats are threatening this good part of America. I had to register with the Delaware Secretary of State and the Division of Corporations, get a federal employer identification number, buy commercial liability insurance, register with the Delaware state Department of Finance, etc.
I didn't even try to open a business in my hometown, New York City, because the bureaucracy is so ferocious. The fastest-growing cities of the world make it easier. In Hong Kong several years ago, I got a business permit in just one day. It's a reason Hong Kong is rich. Entrepreneurs are encouraged.
But at least America is a close second.
America also has a different idea about failure. The Stossel Store was a bad idea. I lost money. D'Souza says that in other places, that would be evidence that I am a complete failure. I tried to make a profit, failed and so shouldn't try again.
That's the attitude in most of the world, says D'Souza.
"You say: 'You know what? I tried my hand at business. It didn't work. Now, let me take a salary job where I'll have some security."
He says that's not true in America.
"An American will start a company. It'll fail. Pretty soon, he's starting a newspaper, or he's now trying to export fish to Japan."
We know that Thomas Edison invented the light bulb, but Edison failed much more often than he succeeded. He had hundreds of failures. He was fired by the telegraph office, and lost money on a cement company and an iron business. Henry Ford's first company failed completely. Dr. Seuss' first book was rejected by 27 publishers. Oprah was fired from her first job as a reporter. A TV station called her unfit for television.
"There's something in the American temperament that says, 'Gosh, I lost seven times but that's OK,'" D'Souza says. "And I think that that's a resiliency of the American spirit."
It's one of several great things about America.
John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and of "Myth, Lies, and Downright Stupidity." To find out more about John Stossel, visit his site at >johnstossel.com. To read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2010 BY JFS PRODUCTIONS, INC.
DISTRIBUTED BY CREATORS.COM
