Government Action Causes Unemployment

by: thomas e. brewton | published: 07 07, 2009

The more the President flails around with barrages of new programs, taxes, mandates, and business takeovers, the warier businessmen become about hiring new workers.

Hence the accelerating level of unemployment, now at 9.5%, the highest level in more than 25 years. That picture is even worse when allowing for the decline in the average work week to 33 hours.

The administration continues to use the crutch of blaming President Bush for everything that goes wrong. But it can't escape the fact that its first official economic act was the $787 billion stimulus package, which was by many multiples the largest such program in history. When it was enacted, the unemployment level was approximately half the present 9.5%.

The standard liberal-progressive-socialist rationalization for failure was provided, in advance, by the New York Times's left- wing propagandist Paul Krugman: the government isn't spending enough. Mr. Krugman, in his February 12, 2009, column (shortly after passage of the stimulus bill), wrote:

For while Mr. Obama got more or less what he asked for, he almost certainly didn't ask for enough. We're probably facing the worst slump since the Great Depression. The Congressional Budget Office, not usually given to hyperbole, predicts that over the next three years there will be a $2.9 trillion gap between what the economy could produce and what it will actually produce. And $800 billion, while it sounds like a lot of money, isn't nearly enough to bridge that chasm.

Since then, the President has upped the ante to many trillions of dollars, with proposals for socialized healthcare and other enlargements of government's interventionist role in our lives.

All this not withstanding, the July 6, 2009, edition of the Wall Street Journal, in its front-page headline article, reports "Calls for More Stimulus Grow."

Such blather, coming from politicians and Keynesian government economists, may make the public believe that effective action is being taken. But it's just a PR smoke screen.

Much of the first-round stimulus package, aimed at public works that would put people to work, remains unspent. That is the inescapable nature of government public works spending. Months' or years' time is needed to clear challenges by environmentalists and other special- interest groups, not to mention planning and letting of contracts. But that can't be used by the administration as an excuse, because it was the Democrat/Socialist Congress that designed the pork-laden stimulus package.

What then is stopping business from hiring more workers?

The answer, in large part, is that, with its pretensions to a new New Deal, the Obama administration is recreating the atmosphere of FDR's Hundred Days blitz of new Federal agencies, huge tax increases and continual business bashing. See A New Deal Frame of Mind and A Jackboot at Home, an Olive Branch Abroad. Businessmen were so frightened and unsure of what might come next that they stopped hiring workers.

Jerry Bowyer, in Why Isn't America Hiring?, explains:

America isn't hiring precisely because of government policy. Small business owners, who are usually the first into and the first out of the job pool, are standing by the fence and watching. They are paralyzed by regulatory uncertainty. If they hire someone who ends up doing poorly, will they be able to fire that person? Will they have to pay their health care bills after they've been terminated? If so, for how long? Who will pay for all these stimulus checks? If it will turn out to be small business, why would they hire instead of keeping costs low to prepare for the big tax bill? Where will the market move? Are you in the right business or are your clients in a politically disfavored industry? Are your clients in health care (being nationalized), autos (already nationalized), banking (somewhat nationalized) or any energy production process which uses carbon (pulverized)? Until you know, you don't grow, and until you grow your market, you don't grow your payroll.

Jobs aren't languishing despite the government's best efforts. They're languishing because of them.

add a comment