The economic news as of late has been dismal. Banking crisis, and debt crisis in Europe. A foreshadowing of the government debt crisis in the US was played out in budget negotiations.
The President’s last promise to us was that he will release a big economic plan after Labor Day.
Skimming various publications around the internet and all the talk is on jobs. I have some news for you, Presidents don’t create any jobs. They do create a climate of confidence, and create an atmosphere where others can create jobs. But Presidents are powerless when it comes to moving the unemployment needle.
I can make an educated guess as to what the President’s jobs plan will be. First, extension of the payroll tax credit. Second, an infrastructure bank. Third, targeted tax breaks for hiring employees.
None of this stuff will work any better than the bailout plans and stimulus schemes.
None of it is imaginative, and it’s more of the same. The logic behind these plans are the same logic that has permeated the Obama Presidency since the beginning. Central planning. The President, i.e. government, knows best.
That’s not how you grow an economy.
Most people point to small business to grow an economy. However,
If small businesses, or more specifically new small businesses, are an engine of job growth in the United States, that particular engine has been getting less powerful. Between March 2009 and March 2010, new establishments generated 1 million fewer jobs than over the period from 2005 to 2007. About 85 percent of that decline was related to a reduction in the number of new establishments. The other 15 percent was attributable to the smaller average size of those new establishments. In contrast, the 1 million fewer jobs per year coming from new establishments between the years 2000 and 2005 were all attributable to a decline in the size of the establishments—the number of new establishments per year actually rose slightly over that period.
All that government spending netted us nothing. Businesses are doing more with less.
Contrast that with Marc Andreessen’s article this week end.