Economic Growth

This AP article is at the top of my home page this morning, and, after reading it, this little light went on in my head about the main difference between the approach to government by Obama and Romney. Actually, it goes back to a comment I made the other day about the relationship between economic growth and employment. Obama believes government can create jobs, and actually claims his policies have done so. But there can be no meaningful private sector job growth without economic growth. In each of the last 3 years economic growth has been slower than the previous year, and yet, according to the BLS, unemployment has declined from 10.1% to 7.8%. That’s sort of like a college student telling his parents that his grade point average has gone from a 2.5 to a 3.0, but he’s only attended half of his classes. It’s just not believable.

Now are there things that government can do to affect economic growth? You bet, and our lack of economic growth is largely due to uncertainty in the market place caused by things governments have done over the last 4 years. And no amount of stimulus or QE infinity can erase the negative effects of bad fiscal, monetary and regulatory policy.  Government can’t just say to a private company: here’s some money — go hire someone.  The purpose of business is not to provide jobs.  Business exists to make money, and employees are nothing more than a by-product of a successful business.  Progressive Democrats (I know — redundant), by and large, don’t seem to be able to grasp this simple concept.  A President Romney may not be able to do any better, but a growing number of people think he couldn’t do any worse.

I know we have business people who frequent this blog — I’m one myself.  Let’s have a discussion about the circumstances under which you’ve hired people, how government actions, tax policy and regulations affect your business, and what changes a President Romney could make that would have a positive effect on the growth of your business.

 

Advertisements

29 thoughts on “Economic Growth

  1. Cluster October 18, 2012 / 10:19 am

    Great post Spook. This line caught my attention:

    Business exists to make money, and employees are nothing more than a by-product of a successful business. Progressive Democrats (I know — redundant), by and large, don’t seem to be able to grasp this simple concept.

    Democrats do not understand that simple concept as evidenced by their call for business’s to do their “patriotic duty” and hire people. Government is not a driver of the economy, it is a referee, and that is one component of the government that Obama has completely neglected. There was collusion and corruption within the financial sectors that led to the housing crisis which were not investigated by the Obama administration unlike the Bush administration which investigated, indicted, and prosecuted companies like Global Crossing, Adelphia, and Enron which led to the imprisonment of a Bush family friend Ken Lay. The Justice Department is the best regulatory agency the government has, and it is not used, especially under Obama, who prefers to invoke Executive Privilege to protect his friends.

  2. Count d'Haricots (@Count_dHaricots) October 18, 2012 / 2:19 pm

    In Andrew Carnegie’s Gospel of Wealth essays, he proffered that there is no reason we cannot have full employment and an ever expanding economy. the codicil, of course is that businesses need to decide where and how the market operates and react/respond/correct as necessary. Understood in the calculation is that the labor force needs to move with markets not against them; training to be a fireman (shoveling coal) on a locomotive was once a fine profession and if the government had its way, it would still be a lucrative profession. But innovation and markets don’t pay attention to governmental bureaucratic inefficiencies unless those inefficiencies stand in the way of those forces.

    As you know, I’ve had several businesses, some successful, some not so much … okay … a few dismal failures but, hey it sounded like a good idea at the time. Win or lose, boom or bust hiring decisions are always predicated upon the business plan and long term budget planning. Currently we are not hiring and the remaining employees have had to cut hours to make payroll (I just thought of another reason first time claims don’t match the unemployment numbers; underemployment claims). Everyone is working a flex schedule because of the looming California Tax increases. If one or both of the major bills pass our margins will be cut significantly.

    A large portion of our business is determined by the County contracts. They (the county) have been hinting they will need to change their process depending on the outcome of the Tax Propositions this November and we anticipate a large interruption in business while the pay/rate/contract portion is straightened out. We’d also like to move to new digs but that’s all on hold.

    • bozo October 19, 2012 / 12:45 pm

      Drag, since if the tax hikes don’t happen, you get the axe? You have my sympathies, but I can’t imagine the conservatives here not cheering your demise since you are on the “spend” end of the “tax and spend” equation.

      What Romney could do for me and my business is collapse the education system completely. My kids are out of college, so if the next generation’s education is gutted, my family will own it. My greed says Romney/Ryan should cut off granny and the babies. Dump those expenses and lower my taxes. My BMI is 22 so dump those morbidly obese pre-diabetics now, too, before they start draining Medicare completely. Smokers also need not apply. If they’re suicidal hedonists, they are on their own.

      My job is an American exclusive and can’t be outsourced. In fact, I am in Cebu in the Philippines right now hauling in those pesos to bring back to the States next week. Outsource away, Mr. Romney. It just means I get more travel perks and frequent flyer miles as nations like this one build new infrastructure on outsourced American jobs. NBO’s change my business plan, but not for the worse.

      If only my ethics and morals would let my inner conservative free, I could rejoice in the destruction of America’s safety net for my personal gain, too. Problem is my empathy forces me to see things like one out of four of my beloved female customers as having to face breast cancer, and I want to cure them all, even if it costs me everything I have. Maybe someday I’ll grow callous to my compassion. I hope not.

      So what if my progressive leanings cause me to cut off my own nose to spite my face – clowns like me can always just stick on another big red one.

    • Count d'Haricots (@Count_dHaricots) October 19, 2012 / 1:11 pm

      Since you’re obviously stupid I’ll write slowly.
      My Wife and I OWN a Business. Our Employees are working part time. Our Business will suffer if the tax increases go through. You are an imbecile.

  3. theamazona October 18, 2012 / 2:44 pm

    I just made a comment on the debate thread about the vast scope of job creation associated with expansion of the petroleum industry, which is now inhibited by federal actions and which is facing even more interference from the EPA acting as a stalking horse for Leftist agendas.

    When people think of oilfield related jobs, they think of greasy men wrestling pipe sections around on a drilling platform—if they even know that much about it. But the industry depends on so much more, ranging from the need for trucks (which need tires, batteries, upholstery, radios, etc) to light towers to pond liners to fire retardant clothing to tanks to pumps to pipe to hoses to…….the list of industries which grow to meet the demands of the oilfield is very lengthy.

    And, of course, every person who gets a paycheck anywhere along this income stream spends it on everything from cell phones to cars to food to clothes, branching out the effect. They also need housing and medical care.

    Shut down this industry, as was done in the Gulf, or limit it, as is done by restricting permits on federal lands or interfering with the process as is planned by new regs on fracking, and the domino effect downstream from the oil industry itself is staggering.

    • bozo October 19, 2012 / 12:53 pm

      Yawn.

      Oddly, you oil champions are starting to sound like the infamous Ministry of Candles. Gotta save those oil jobs even if cars are capable of using one quarter the gas they use now, or in fact – like the Tesla S – can run literally on sunlight for free forever. Google that. It’s really cool, unless you’re trying to save the Ministry of Fossil Fuels.

      • Retired Spook October 19, 2012 / 1:31 pm

        like the Tesla S – can run literally on sunlight for free forever.

        Not in Indiana, and especially not November through January.

      • Amazona October 19, 2012 / 2:00 pm

        I see freakzo is one of the Marie Antoinette Brigade, the “let them eat cake” group. Just pay fifty grand for the car, you idiots, and you can “drive for free”.

        Yeah, like fifty grand is a reasonable price for most Americans. And that is the cheapest model available.

        Oh, that’s right—-the feds will chip in to help you pay for it.

        And what is the cost of Tesla batteries? And their life span? And the environmental impact of making/disposing of those batteries?

      • Amazona October 19, 2012 / 2:04 pm

        From jalopnick.com: emphasis mine

        “Tesla Motors’ Devastating Design Problem

        Tesla Motors’ lineup of all-electric vehicles — its existing Roadster, almost certainly its impending Model S, and possibly its future Model X — apparently suffer from a severe limitation that can largely destroy the value of the vehicle. If the battery is ever totally discharged, the owner is left with what Tesla describes as a “brick”: a completely immobile vehicle that cannot be started or even pushed down the street. The only known remedy is for the owner to pay Tesla approximately $40,000 to replace the entire battery. Unlike practically every other modern car problem, neither Tesla’s warranty nor typical car insurance policies provide any protection from this major financial loss.

        ……………………………………………..

        Despite this “brick” scenario having occurred several times already, Tesla has publicly downplayed the severity of battery depletion risk to both existing owners and future buyers. Privately though, Tesla has gone to great lengths to prevent this potentially brand-destroying incident from happening more often, including possibly engaging in GPS tracking of a vehicle without the owner’s knowledge. ”

    • ricorun October 20, 2012 / 6:50 pm

      I guess the good news, theamazona, is the petroleum industry isn’t about to go away, and will continue to expand no matter how robust the renewable energy industry becomes. The other good news is that scope of job creation associated with the expansion of the renewable energy industry is even more vast. According to a report by the Brookings Institution, In 2010, 2.7 million jobs in the United States directly contributed to the production of goods and services that had an environmental benefit (“the clean economy”, as they call it). In comparison, 1.3 million jobs in 2010 directly support the production of fossil fuel-based energy, derivative manufactured products, and machinery; that number rises to 1.8 percent (2.4 million)
      if all wholesale and retail distributors and transporters are included such as gas station employees.
      That’s pretty amazing how relatively new the clean economy is and how established the fossil fuel-based economy sector is.

      The Brookings study also found that for every $1M spent, the clean economy sector created 16.7 jobs versus 5.3 jobs for the fossil fuel sector. And I presume, given it’s overall high tech nature (something the US is still particularly good at), it is also not surprising that the clean economy sector also generates twice as much in exports per individual job than the US economy in general.

      This is probably a particularly good thread to bring this study up, along with bringing up again the study by Google.orgindicating the economic benefits of aggressive investment in renewable energy. To be sure, they don’t cover exactly the same ground, certainly not in the same way, but they do dovetail. And it brings up an interesting question for the more business savvy members of our little group: Is investing less RIGHT NOW for a given unit of product that has multiple possible production streams (let’s say, 1 kJ of energy) always the best way to go? My answer would be… of course not! Many other factors need to be considered. Among them would be, how many jobs does it create? How does it affect my country’s trade balance and national security? And perhaps most importantly, how many FUTURE dollars will that investment make me by way of market penetration, intellectual capital, technological spin-offs, etc.?

      As I have said many times before, the future of energy, specifically its diversification, is a gigantic market. Just the domestic market is gigantic, the global market is mega-gigantic. It is also something uniquely suited for the good ole’ US of A to make a big impact. But it is WAY beyond the capabilities of a single company to affect, regardless of its size (that’s still true, thank God). The government has to get involved — a concept essentially every other developed nation on the planet has already recognized. They have and they do because they realize two fundamental things: (1) the current energy market is dominated by OPEC, which is a consortium of national interests, with other agendas besides pure market interests. (2) the multitude possibilities for transformational technologies in other spheres are far greater than the transitional technologies themselves (as huge as they themselves are).

      But here in the US we’re still confusing micro-economic principles with macro-economic ones. This thread is a good example. I am tempted to relate my own personal experiences in business, because the major one was (eventually) built upon an atypical business model. In addition to the strength of the core product itself, that model was partly based on regulations imposed by the FDA and FCC, which we figured out a way to make profitable for us (ideas which still provide income), and partly on defraying costs by allowing our OEM vendors to operate independently (however nominally) rather than absorbing them. In effect, we operated as “mini” venture capitalists rather than overlords. We taught them stuff that would allow them to expand into areas we weren’t interested in, but for a price they could afford at the time but had to keep paying. But the fact of the matter is that ALL of the stories related thus far on this thread are basically “mom-and-pop”, and decidedly micro-economic examples. Mine included. As wonderful as they are (and I’m sure we’re all proud of our successes) none of them provide a prescription for running a country as large and varied as the USA, nor as a prescription for competing in the global marketplace.

      • Amazona October 20, 2012 / 7:22 pm

        You say everything many times.

        I wonder just what is considered to be in “direct support of” the production of fossil fuel-based energy, derivative manufactured products, and machinery;.

        So you include in your “direct support of” the petroleum industry “…production of fossil fuel-based energy….” which I did not even mention, and “….. derivative manufactured products and machinery…..” which I take to be derivative of fossil-based energy and therefore not mentioned by me.

        I spoke of machinery necessary to extract and ship oil and gas, not the energy itself, not what is made from it, and not what is a derivative of it.

        My list of jobs is upstream from production, yours is downstream. My list includes expansion of many markets which do not serve the petroleum industry exclusively, such as manufacturers of truck batteries and upholstery fabrics and radios, which also go into the additional trucks needed to support the industry.

        And after all those words, you still say only that you, too, are in favor of alternative energy source research and development. I think. I got lost in the verbosity. Every conservative I know is in favor of alternative energy source research and development.

        It’s just that most of us are not in favor of government intervention in the market, and I don’t think you addressed that.;

      • Amazona October 20, 2012 / 7:34 pm

        I also object to the either/or paradigm of fossil fuel vs alternative energy, what is so coyly called “clean energy”.

        Just one example, because we have gone through this so often and I find it tiresome to repeat it all.

        Coal fired power plants use diesel generators. Coal fired power plants are strictly limited regarding the amount of carbon they can put into the air. A partnership with a biodiesel manufacturer would allow coal fired plants to produce more coal-generated energy without increasing their carbon or pollution footprint, which—all else being equal—-should make it worth their while to subsidize biodiesel production, IF the cost is offset by the profits of more power production.

        But if the government is going to interfere in actual coal-fired energy production, then changing from petro diesel to biodiesel is not going to make any difference, because the output is going to be limited by the vastly empowered EPA.

        A private co-op in one of the Dakotas sets aside a certain amount of crops grown to produce biodiesel, which is then distributed among the participating farmers, to use to fuel their farm equipment. They find this economical, profitable, and they also benefit from the additional lubricating quality of biodiesel and their engines run better and last longer.

        Yet we are told that the only way to develop technology like this and make it profitable for the manufacturer is to have it subsidized, often very heavily, by the federal government.

        Tunnel vision regarding alternative energy seems to be focused on government participation. I don’t mind some tax credits, and I don’t care if states get involved, but the feds need to butt out.

        Every federal proposal should have to be accompanied by an explanation of how it complies with the 10th Amendment before it can even be considered.

      • ricorun October 21, 2012 / 7:02 pm

        Amazona My list of jobs is upstream from production, yours is downstream. My list includes expansion of many markets which do not serve the petroleum industry exclusively, such as manufacturers of truck batteries and upholstery fabrics and radios, which also go into the additional trucks needed to support the industry.

        Okay, so you’re keying on indirect effects of the petroleum industry. The Brookings study specificially excluded those. But clean industries need all those “upstream” things too. So I don’t see where it’s relevant.

        By the way, it appears I must have screwed up the HTML code for the link. Here’s the link: http://www.brookings.edu/~/media/research/files/reports/2011/7/13%20clean%20economy/0713_clean_economy.pdf

        <I also object to the either/or paradigm of fossil fuel vs alternative energy, what is so coyly called “clean energy”.

        The purpose of the Brookings study was to make comparisons, not to advocate an “either/or” approach. And I certainly don’t. As I said at the top of my previous comment, “the petroleum industry isn’t about to go away, and will continue to expand no matter how robust the renewable energy industry becomes.”

        It’s just that most of us are not in favor of government intervention in the market, and I don’t think you addressed that.

        Well, I didn’t address it directly, not here anyway. The only thing I mentioned was that because the world energy market is so influenced by political rather than market forces, the external costs so considerable, and the payoffs involved in providing alternative solutions are so potentially great, it is in the best interests of the nation at large for the government to get involved. And it’s not a new concept — the federal government has been involved in incentivizing new technologies and infrastructure critical to national interests for more than 150 years. In fact, the recent boom in shale gas/tight oil would not have been possible without significant federal involvement in researching, developing, and testing many of the necessary technologies that ultimately made it profitable. As they mentioned further, While details vary, the story is basically the same for nuclear power, natural gas turbines, solar panels, and wind turbines — pretty much every significant energy technology since World War II. That’s because the private sector alone cannot sustain the kind of long-term investments necessary for big technological breakthroughs in the midst of volatile energy markets and short-term pressure to produce profits.

  4. Retired Spook October 18, 2012 / 4:30 pm

    I had an interesting experience back in the late 70’s and throughout the 80’s in a family business. The business actually dated back to 1908, and was purchased by my grandfather during the Depression when it was about to go under. Without getting into a great deal of detail, we were a mom and pop operation when I was young, and by the time I came back from active duty in the Navy in the 70’s, we still only had 5 or 6 employees. By the mid 80’s when my younger brother joined the company, we were up to 10 employees, and closing in on $1 million a year in revenue. The manufacturer of our main product line had come out with a number of new innovative and competitive products, and our growth took off like a rocket. By the time I sold out to my brother in 1991, we were up to 22 employees, had just opened our first branch office, and annual revenues had climbed to nearly $2.5 million. The company continued to grow exponentially for the five years after I left, and, when my brother sold out to a Fortune 500 company in 1996, he had 5 branch offices, 85 employees and annual revenue of around $8 million.

    Throughout all that expansion, we never got, nor asked for, any government help. We always paid our employees more than they could earn working for our competitors, and actually lured some terrific people away from competitors because we offered a great work environment, great wages and benefits, and a fantastic training program. Recognizing that well-trained people were worth more, our compensation package was tied to training, so every time a technician completed a training program, he/she got a raise. The company has changed hands 3 times since 1996, but many of the people I hired back in the 80’s are still there. The dynamic we experienced is something that most Progressives simply can’t relate to.

    • 1neocon October 18, 2012 / 8:02 pm

      “Comedian” D.L. Hughley to Joy Behar: Romney Talked to Obama During the Debate ‘Like a Man Talking to a Servant’

      “It’s like Mitt Romney learned manners from watching 50s TV shows.”

      wasnt it mitt who said….. “a few years back O would be getting our coffee”?
      Oh wait that was slic willy from arkansas the KKKdonk.

      • Amazona October 19, 2012 / 10:55 am

        Yet it was Barack Obama who looked down his nose in contempt and ordered Mitt Romney to “proceed”.

        Mitt Romney never ordered the president around or assumed a position of authority over him. He merely challenged him, man to man.

    • puppetsock October 18, 2012 / 10:05 pm

      post using fake email address deleted//Moderator

  5. feelthefang October 19, 2012 / 7:09 am

    “and what changes a President Romney could make that would have a positive effect on the growth of your business.”

    For those of us in the Heritage Seed business and those who business is selling legal guns Mitt’s election will have no positive effect at all. In fact Mitt’s election will have a big negative effect. The company I grow for will only want twenty-five of my available one hundred and eighty-five acres. A drop of around eighty-five percent.

    That’s a lot of income lost that can not be made up planting soy.

    So be it.

    GTFO!! 2012

    • Retired Spook October 19, 2012 / 8:42 am

      Fang,

      Color me dense, but I’m not following your logic on the cut-back of planted acres if Romney is elected. He isn’t going to magically fix everything. Most of us are just hoping he stops the bleeding. Besides, with all the threats of violence and revolution from the Left if Romney DOES win, I would think the heritage seed business would grow.

      • GMB October 19, 2012 / 9:48 am

        Spook.

        The Heritage seed business is mostly fueled by survivalist such as myself and by people who have a fear of our government. Most, but not all of that fear will disappear if Mitt is elected.

        Only to return when someone like barky gets elected again.

    • Amazona October 19, 2012 / 9:45 am

      The only reason I can think of for fang’s prediction is that without Obama in office, Americans will no longer feel the need to prepare for economic disaster, growing their own food and defending their homes and families.

      • GMB October 19, 2012 / 9:51 am

        It is not that they will not feel the need, it is there will be no urgency about it.

      • Amazona October 19, 2012 / 10:51 am

        Personally, I always felt the need was more in preparation for a national catastrophe, not just fear of the government.

        I used to watch a show that had interviews with national security advisers, who talked about various scenarios discussed in the Pentagon. (This kind of speculative think tank operation is responsible for the Left’s shrill hysteria that the Bush administration was planning an Iraq invasion before 9/11. They were not PLANNING it, as in preparing to do so, but this was one of literally dozens of potential scenarios they had gamed, including invasion from outer space. It’s how they stay sharp, brainstorm ideas, etc.)

        One was the ease of using biological weapons to attack the U.S. While the naysayers bleat that there is no “delivery system” the simple fact is that a dozen suicide volunteers, infected with one of the insanely virulent and drug-resistant strains of disease that have been developed, could spread throughout the world (or just the U.S. if that was the only target) and stroll through airports and take carefully chosen flights, coughing and sneezing and interacting with people who would then get on other planes and go other places, and spread deadly disease throughout the country without ever needing a bomb or a missile.

        We as a nation have been quite complacent as rogue nations have been working to develop such biological weapons, but the outcomes and consequences have been recognized and discussed, and they all include the isolation of some groups of people, away from centers of civilization, being self-sufficient. This is where seeds that can be planted to produce more seeds (unlike hybrid, single-generation seeds) come in.

  6. Retired Spook October 19, 2012 / 10:19 am

    OT, but when Glenn Beck speculated on this close to a month ago, the Left called him nuts. It looks very much like he may be proved right.

    The details of the September 11 attack that killed four Americans at the U.S. consulate in Benghazi are still murky and there’s certainly more to be known.

    Former CIA officer Clare Lopez argues that the key issue is “the relationship of the U.S. government, Ambassador Christopher Stevens and the U.S. diplomatic mission in Libya with Al Qaeda.”

    That relationship, Lopez argues, could be connected to the rise of Islamic brigades in Syria, who recently created a “Front to Liberate Syria” to wage jihad against the Syrian regime and turn the country into an Islamic state.

  7. The Return of Rathaven October 19, 2012 / 11:03 am

    What we need here is an open thread.

    How many saw the Alfred E. Smith Dinner last night? Romney was on fire; Obama was a burnt match.

    Romney: I was hoping that President Obama would bring Joe Biden along, because he’ll laugh at anything.

    Romney: We were chatting pleasantly this evening as if Tuesday didn’t happen.

    Romney: Usually when I get invited to gatherings like this, it’s just to be the designated driver.

    Romney: We’re down to the final months of the president’s term.

    Romney: I have my beautiful wife Ann, he has Bill Clinton.

    Romney, referring to St. Peter, says skeptics will say “if you’ve got a Church, you didn’t build that.”

    Romney says Obama’s new campaign slogan is “you’re better off than you were four weeks ago.”

    Romney: The president’s remarks tonight are brought to you by the letter O and the number 16 trillion.

    Romney says headlines will say “polls show Obama leading from behind.”

    • Cluster October 19, 2012 / 11:30 am

      I did see the video and you are correct, Romney had them in stitches including Katie Couric and Chris Matthews.

  8. Fredrick Schwartz, D.S.V.J., O.Q.H. [Journ.] October 19, 2012 / 11:57 am

    Forkers are not allowed to post here, following many months of defiance of our ban on racism and religious bigotry. //Moderator

    • bozo October 19, 2012 / 12:20 pm

      I like his movie and recommend everyone see it. Not for the reasons he wants, but it shows the incredible journey Obama took from being a fatherless child to president. It must be particularly painful now since Dinesh features his wife and kids early in the movie as some kind of example of why he’s as cool as Obama, or something like that.

      There are a few unintentional punch lines in the movie. One where Dinesh states Obama got no love from his father, and after his death was determined to deserve that love, the love he never got. It sounds like a dime-store cut-out bin romance novel.
      The end calls for the viewer to either love or hate Obama, an intentional flame-fanner graphic that liberals will find chuckleworthy.

    • The Return of Rathaven October 19, 2012 / 12:38 pm

      Dinesh D’Souza? What’s wrong did you say everything you had to say about Big Bird?

      Let’s discuss dogs on cars, movie trailers, binders and other petty distractions, because we certainly can’t discuss the rousing success this Administration has been.

      How about you post that 10 pages of Obama promises kept for the thirtieth time. All those millions of Americans have plenty of time to read it while waiting for work.

Comments are closed.