Serious About Job Growth? The Council That Doesn’t Meet
- Posted by Jeff Carter
- on January 18th, 2013
President Obama established a job council to deal with unemployment. He did it a year ago. They haven’t held a meeting yet. If you say your number on priority is “jobs”, wouldn’t you want your council to hold a meeting? Just to make it look good?
Over the past year, the unemployment rate has dropped a little. But job growth is terribly anemic. One of the reasons for that is governments can’t create jobs. Politicians from both parties like to take credit for job creation. The reality is they have a small effect in actually creating a job for someone to be gainfully employed. The types of jobs politicians create are bureaucratic jobs that do nothing for economic growth. Those types of jobs are zero sum.
The only action politicians can take is to put in place the correct policies which drive the correct economic incentives so private businesses can create jobs. Currently, the policies Obama has put in place cause private industry to contract and eliminate jobs. Let’s list a few of them:
1. Tax increase in 2013
3. Strict limits on where energy companies can drill, explore, and produce energy.
On state levels, we have seen some states increase taxes. They also have passed increases in minimum wage laws. Both are job killers.
Higher spending, higher debt, more regulation and higher taxes is not a recipe for growth. If you remember your calculus, a dollar at any given moment in time can go into different investments: Treasuries, munis, stocks, or cash. If it goes into stocks, it leads to growth. Most of the money these days is trending toward Treasuries, munis or cash because of regulatory incentives or fear.
Of course, the politicians want to shift the blame to corporations for taking jobs overseas. However, the jobs that are being taken overseas are usually highly commoditized jobs. Once companies can figure out ways to automate those jobs, a lot of times the manufacturing comes back to the US.
The solution so far has been to extend unemployment benefits. Some politicians are trying to set up programs in community colleges so retraining can occur. The former is stupid. The latter takes time. Our K-12 educational system is busted, and it doesn’t get that much better at higher levels. If we really wanted faster change to occur, politicians would create economic incentives for corporations to pay for retraining of employees at private for profit institutions. It’s not in a corporation’s DNA to do massive retraining of employees. They need to outsource that.
If Obama is really serious about job growth in the US, he will lead the charge to create better incentives for hiring. However, he knows that the American economy is so strong, that even with all the albatrosses he has thrown on it, jobs will get created in the long run. It’s just going to take a really long time.
But, he doesn’t care about that. He only cares about his upcoming inauguration. Soon, it will be about his legacy.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)