Sunday, September 11, 2011

Why more Stimulus won't create more jobs

President Obama made a "jobs speech" this past week that either shows stupidity (which I don't believe), incredible economic naivete (which might be the case for him, but some of his advisers certainly know better) or simply a desire to excuse more pointless spending.

What's the harm of such spending? Besides the debt incurred, the problem is that it will actually prolong our crisis.
"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."
The left has accusingly pointed out that companies are sitting on large amounts of cash, but they aren't hiring. They even know why, but they won't do anything about it.
The answer to that question [why companies with money aren't hiring] has become a political flash point between the White House and big business groups such as the U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of "uncertainty," which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.
This has become well-known to anyone following the issue, yet those who deal with economics on the theoretical level are still surprised by the "news."

The man in the aisle seat is trying to tell me why he refuses to hire anybody. His business is successful, he says, as the 737 cruises smoothly eastward. Demand for his product is up. But he still won’t hire.

“Why not?”

“Because I don’t know how much it will cost,” he explains. “How can I hire new workers today, when I don’t know how much they will cost me tomorrow?”

He’s referring not to wages, but to regulation: He has no way of telling what new rules will go into effect when. His business, although it covers several states, operates on low margins. He can’t afford to take the chance of losing what little profit there is to the next round of regulatory changes. And so he’s hiring nobody until he has some certainty about cost.

Perhaps our biggest mistake was hiring a leftist professor to govern the country during this time of crisis. He cares more about his agenda than our jobless citizens, and is still completely blind to the plight of the average worker.

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