Generate Wealth Because the Government Can’t
photo credit: surface to air
President-elect Barack Obama has put forward a $775 billion “American Recovery and Reinvestment Plan” to create 3 to 4 million new jobs. Unfortunately, the government can’t really create jobs. They can only steal money and productive value from the economy.
In a capitalistic economy, labor and capital freely flows to the most productive enterprises precisely because they’re the most profitable. All government can do is inefficiently redistribute wealth that the private sector creates.
The jobs that the Obama administration creates won’t add value to the economy. Instead their wages will be paid with stolen money (taxes) that could have been used to create more wealth. Instead, the standard of living will fall, because more government employees means more regulation and more regulation means a less efficient economy.
The real creators of jobs are the very readers of this blog, the American small businessman and woman. So, do your part and keep your eyes open for that next great opportunity. Generating wealth is more patriotic than it might seem in 2009.
George Anderson on January 14th, 2009 9:03 pm
Dane,
Blaming Obama and the government for the economy is not likely to generate the type of response you really want. Obama is not even in office.
John Flynn on January 15th, 2009 7:20 am
Well what about FDR? He created a lot of jobs for people out of work. I think the “bailout” money under Obama will be helpful (under Bush it seemed the Banks got the money but didn’t hold up to their end of the deal).
The most important thing Obama can give us is hope. The economy runs on Fear and Greed. 60% of Americans think Obama can fix the economy.
That will go a long way in helping consumer spending. And that is what we need right now is consumers feeling comfortable enough to spend.
Kitchen Bar Stools on January 15th, 2009 7:30 am
Yeh i really agree with you there. I believe it’s up to small businesses to generate jobs and support the economy from the bottom up. It’s all well and good these big firms making mega profits, but when their world goes bad who’s there to keep the economy standing…the small guys. Keep up the great blogging!
tuft on January 15th, 2009 7:45 am
Dane,
You’re absolutely right. 70 precent of the jobs in this country are created by small businesses, run by the individuals who understand the never ending values of self-reliance, hard work, and entrepreneuralism. This is true regardless of what political party controls Congress or holds the Office of the President.
Curt on January 15th, 2009 8:22 am
I couldn’t agree more.
Jaclyn on January 15th, 2009 8:37 am
I agree that it’s the small businessman and woman that “create” the jobs rather then the government. but maybe with the bailout money and the new plans of “creating jobs” will be in the sense of getting the economy’s back up at least a little to the point where people are shopping regularly again and in turn encourages more people to open up new business’ which will of course actually create the new jobs.
Kurt Henninger on January 15th, 2009 11:20 am
I truly believe that one must take it upon one self in order to generate your own wealth, and not wait for the government. Taking action into your own hands is always the best thing.
Guerrilla Billionaire™ on January 16th, 2009 11:32 am
While it’s true that government doesn’t create wealth directly, it can do a great deal to stimulate wealth creation by the private sector. The truly savvy entrepreneurs closely follow proposed changes in government regulatory policies which can affect a particular industry and prepare to pounce once those policies take effect.
Study history to see that this true. Go back to the introduction of the “Victorian Internet” or telegraph about 160 years ago. Government policy stimulated the investment which resulted in the creation of this new industry. Ditto for railroads in the same era.
This pattern is unrelenting. Study the creation great industries such as radio, television, cable television, the WWW, cellular communications, broadband, etc. It all starts with a change in a government policy designed to stimulate capital flow to a new industry.
Yes, there are a few exceptions but they are found in small industries. No government regulatory change helped trigger the Pet Rock or Hello Kitty phenomenons.
Bottom line: there’s gold to be found in reading those long boring 500 page descriptions of proposed regulatory changes put out by various government agencies every few years.
Finally, after 8 years of the most inept administration in history, we will need every bit of help we can get to dig our way out of this hole.
Paula Williams on January 16th, 2009 10:16 pm
I agree that the government cannot create jobs. Governments are becoming less and less relevant and companies and individuals are becoming more and more empowered.
Eric R. on January 18th, 2009 12:05 am
I agree that governments have become less relevant and that companies have become more empowered. This is bad. It means that large corporations have been increasing in size while small businesses have been trying to stay alive. Large companies have many benefits that small businesses do not have. It is true that the United States has the second highest corporate tax in the world (35%), but at the same time 2/3 of all corporations didn’t pay any taxes last year. This is because they have high-paid accountants and tax lawyers on their side. Good luck to small businesses trying to pay for these guys. Also, large corporations ship most of their goods from other countries that provide cheap labor. Sorry for writing such a long post, but I’ll leave you with one more fact. In the last eight years, the richest 400 people in the U.S. have gained an additional $800 billion for a combined wealth of $1.7 trillion. This is the same amount of money that the bottom 150 million people have. Free market capitalism isn’t bad for everyone. There is a small group in a tight cocoon who have benefitted, while the rest have faced stagnant wages and increasing health care, food, and gas costs.
Dane on January 19th, 2009 1:35 pm
Eric, you can’t separate big business from big government.
Big business survives because of government and corporate welfare, not because of a free market. They’re not in favor of smaller government because the more onerous the regulation, the less it impacts the large business with their legions of lawyers and lobbyists. Small business disproportionately shoulders the burden of government while big business reaps all the rewards.
That’s not free market capitalism. That’s socialism.
Ajita on January 20th, 2009 7:55 am
While it is true that free flow of money and ideas is the most efficient form of economic system, we are deluding ourselves if we believe that deregulation is the equivalent of a free-market. Expanding on what you hint at in the above comment, the big corporate interests are the ones that define the market today. Unfortunately, this is far from a truly free system.
The minimalistic models that free-market capitalism relies on do not take into account many indices, precisely because the corporate interests do not want us to. Contrary to these models mostly developed by neo-cons from Rand and Strauss to Greenspan and Rumsfeld, most successful current economic theories all support the idea that there are certain essential functions that government is required to perform. There are certain tasks that business interests are not suited for- i.e. self interest will not solve these problems (because we did not evolve in conditions where such situations were common).
The task of government in modern society is to identify these anomalous situations and supplement self-interest with directed action. Good examples are environment and health care.
Labels such as capitalism and socialism are blurred in this modern society (see Sweden and China) and only useful as slanderous accusations to hurl at each other in conversation.
cassy on January 21st, 2009 7:33 am
i also agree dont wait for the goverment to make your wealth for you coz it wont happen in this present economic problem that we have now im sure its hard, that is why you make your move on how to get it and prove your self you can make it, coz the goverment are only their to guide you and watch you, it is you who will work hard for you to have your own wealth,if you have money to start a small business then do it now and make it grow coz your not only making a business you are also making a jobs for those people who dont have jobs!small business makes a big rule in our economy!
Eric R. on January 21st, 2009 5:38 pm
Dane, I think that you bring up some good points – that corporations do not favor a certain ideology (free-market capitalism vs. socialism) consistently. Rather, the political system ebbs and flows according to the interests of those of those with capital. Companies act according to one rule: increase profits. They argued for free-market capitalism when they benifitted and now want public money since they’re in trouble.
So, it seems that we ought to look at history to determine whether free-market capitalism actually works. The best example may be Chile. The Freidmanites had it their way for decades continually decreasing the size of their government and continually decreasing the general welfare of its citizens. What happened? The corporations did what is expected of them – make as much money as possible and this resulted in taking money from the poor and middle class until they had nothing left. Unemployment went above 50%. Why do we not condemn this system? Because certain people like it – the CEO’s, the investors, the ones making the money so this system didn’t stop. It has spread with giant voulchers preying on ordinary people until they can’t provide any more, then they look for their next feast. Sorry for the rant, but I think that it’s relevant.
Frank Ross on January 22nd, 2009 2:54 pm
The person that cited FDR has not studied history close enough or with a discerning eye. To this day, it is still debated whether or not FDR’s “new deal” help lift the country out of the depression or whether it was the war ramp up itself that started factories going, enterprise upward movement, etc. As far as I know that topic is still debatable so is the effect of government created jobs.
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