Monday, October 1, 2012

Energion Political Roundtable: JOBS!

The latest question, number seven if you are keeping count, has to do with...

Jobs! Jobs! Jobs!

This is a crucial issue, not because it really should be but because that is all we have been hearing from the candidates. Romney claims he will put in place policies that will "create" x number of jobs. Obama claims that his trillions in deficit spending "saved" millions of jobs that otherwise would have been lost. Both expect us to believe that a President someone has a magical ability with just the right policies to "create" jobs. In reality the only thing the government can really do, modern day neo-Keynesian theory aside, is impede job growth.

The question we have been tasked with answering is as follows:

What are the key policies that should be implemented in order to [create / facilitate the creation of / not impede the creation of] jobs? As always, feel free to compare your ideas to those of the candidates.

That is a big one.

First the major candidates. Romney's "jobs plan" is mostly targeted around getting government out of the way and reducing the barriers to free enterprise, competition and economic activity: lowering taxes, reducing regulation, etc. Pretty standard Republican fare that typically is forgotten about five minutes after they are sworn in. The Obama plan, like most of his other "plans" mostly says Mitt Romney is evil and that we need more and more government tinkering in the economy. President Obama seems to think that jobs are best created with government "investment" (i.e. Solyndra) versus Mitt Romney who claims to favor government getting out of the way. Gary Johnson as a Libertarian takes the Romney approach and goes much further, proposing an elimination of the IRS and replacing the income tax and business taxes with a tax on expenditures, eliminating Federal government subsidies (i.e farm subsidis and other targeted tinkering) and drastically reducing the amount of spending at the Federal level. To summarize, the Johnson approach is a drastic rollback of government interference in the economy, the Romney approach a far more moderate rollback and the Obama approach is to double down and increase the role of the Federal government in the economic activity of the United States.

No surprise I would be most in favor of the Johnson approach with the recognition that the Romney plan is probably more realistic. The Obama plan, a plan that thus far has given us four years of 8% unemployment and $5 trillion in new debt, has managed the feat of being both a short term and a long term disaster but one that has appeal because many people perceive that they are getting something for nothing (i.e. the Obama phone). We can't afford what he has already done and we certainly can't afford four more years of it.

The great myth that is sold to us like economic snake oil is that government spending helps "the poor" at the expense of "the rich". That notion only works if each action taken by the public sector happens in a vacuum. In reality, when you get away from the hallowed halls of ivory tower academia, common sense would tell us some basic economic facts. Money that is spent by the government is either a) taken from the private sector so it can't be used to invest in actual jobs or b) borrowed against future revenue that further sinks this country into debt. We don't create jobs by taking money from Oklahoma, filtering through some government bureaucracies in D.C. and then sending it back to Oklahoma in the form of public sector jobs. That is just shuffling money around. Instead jobs are created when people invest and take risk, meeting a need for capital in return for the potential for profit. Profit is a dirty word but it is the engine that drives investment and investment is what creates jobs.

A perfect example of this was the Keystone pipeline debacle. The plan was to build a pipeline from Canada to the U.S. Gulf Coast, carrying oil from the oil sands in Alberta to the southern U.S.for refining. This would have had several positive results. First, jobs would have been created to build the rest of the pipeline and these are not McDonald's jobs but rather in industries like welding, construction, trucking, engineering, surveying, etc. All high paying, good jobs. Second it would have created additional permnent high paying jobs when completed at the refineries. Third it would have helped in our goal of energy independence, not a completely realistic goal but still every bit helps. Alas it fell victim to the environmental lobby and has been pushed off again until after the election. President Obama would obviously rather borrow more money to fund unionized public sector jobs, jobs for people in a natural and loyal constituency of Democrat voters, than not spend money we don't have and permit the private sector to engage in profitable economic activity that would create jobs and add to the tax base. This is what happens when you have an ideologue with no private sector experience deciding to micromanage the economy.

The private sector has an incentive to come up with innovative products and services at competitive prices. If an employer in the private sector is inefficient or has a bad product, they either adapt or go out of business. In the public sector, notions like efficiency, profit and competition are completely foreign. Little wonder that virtually everything the government does it does inefficiently. Even the vaunted "bailout" of the automakers is a farce because to make that happen bond holders got shafted and the UAW got rewarded.

So the last thing the private sector needs is advice from a bunch of public sector bureaucrats that have never had a real job being lead incidentally by a President who has never had a real job and has as his most significant achievement prior to his inexplicable election as President an incredible string of "present" votes as a legislator. The role of the government in the economy should be, like the Hippocratic oath, to first do no harm and preferably stay out of the way. The less the government gets involved in the economy, the better off we would all be.

At a more fundamental level, the issue is far more stark. It is not and should not be the role of the Federal government to tinker with the economy, to "create jobs" or any of the other nonsense that we have been spoon fed over the years. The real purpose and role of the Federal government is by design very limited, limited to the point that the founders saw fit to specifically state that any powers and authorities not specifically granted to the Federal government belong to the states or the people. In reality what we have is a Federal government that controls every aspect of our life and has created a permanent underclass of dependents who rely on that same government for food, for housing, for education, for transportation, for money, for cell phones, etc. When jobs are scarce people line up and ask Uncle Sam plaintively "Where are the jobs? Save me!" The jobs debate is just one more example of how the Federal government has perversely exceeded its original and proper role and mandate and morphed into a monster.
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