Did you hear the big “question” for our President last week?
“…Since the recovery began, businesses have spent just 2% more on hiring people while at the same time spending 26% more on equipment” the journalist noted, as she stared intently at President Obama. “So why,” she continued, “at a time when corporate America is enjoying record profits, have you been unable to convince businesses to hire more people Mr. President?”
The journalist, of course, was Ann Curry of NBC News. And part of the President’s response –the part where he blamed the lack of hiring on the fact that “a lot of businesses have learned to be a lot more efficient, with a lot fewer workers,” and then noted ATM machines replacing bank tellers as an example – quickly became a familiar sound byte on talk radio.
Unfortunately, neither the President’s statement that preceded his “few workers” comment, nor the assumption that seemed to underlie Curry’s question, got much attention at all. And this is problematic - because they are both important if one is to understand the Obama economy, and the lack of “job creation.”
Let’s look again at the question. “Why….have you been unable to convince businesses to hire more people, Mr. President?” The assumption here is that American businesses hire new employees because they are “convinced” to do so by the U.S. President. Businesses don’t hire employees because they have a need, or an incentive, or an interest to do so – they “just hire” because the President cajoles and persuades and “convinces.” Or so the assumption goes.
This is a false assumption, of course, although I won’t “assume” that Ms. Curry buys into it herself. The President himself has seemingly made this assumption, and Curry’s question provided the President with a modicum of accountability.
But then there was President Obama’s initial response to the question, the part that was largely ignored. “I don’t think it’s a matter of me being unable to convince them…,” the President told Curry. “They’re making decisions based on what they think will be good for their companies…” The President’s acknowledgement that companies are NOT hiring because it is in their best interests to NOT hire, speaks to a phenomenon known in the field of economics as “rational self interest.” Every individual, and every organization, is motivated at least in part by their own self-interest, and this is a very normal, understandable, and very “healthy” thing.
So why is it in the best interests of companies to NOT hire, despite their “record profits?” The answer, in a nutshell, is bad government policy. The more the President and his party try to “have their way” with businesses, the more businesses don’t cooperate.
Throughout the course of his public life Barack Obama has rarely had a positive word at all to say about American enterprise, and has most often characterized business as greedy and “selfish,” rather than rationally self-interested. Now, after more than two years of these kinds of assumptions undergirding our nation’s laws, the lack of “job creation” is beginning to speak for itself.
If this seems “unfair” to the President, then consider some important facts. Take for example the President’s “crackdown” on the banking industry from early January of 2010. Lending institutions weren’t lending enough back then, not even to people with good credit, yet the lack of good lending didn’t seem to matter to our President. So far as her was concerned the crisis of bad mortgage and credit card debt was the fault of “greedy lenders,” so he and his party in Congress brought about a slew of new penalties and regulations upon those lenders, all under the guise of credit card and mortgage “reform.” Now, almost a year and a half later, lending has become even more rare while most of us have seen credit card fees and penalties increase, rather than decrease.
And here are some other facts. During his first campaign for the White House, Barack Obama actually proposed that our government should begin taxing capital. I don’t mean taxing “capital gains,” or interest income. I mean that the man who is now our President campaigned, in part, on a pledge to tax money that is simply sitting in banks. Further, our President also campaigned during the 2008 oil price spike on a promise to tax the so-called “windfall profits” of petroleum companies -as though more taxes would have driven prices of gasoline downward. And he frequently lectured about his desire to bring America to “economic justice,” never really explaining what that would entail, yet being clear that the American economic system is inherently “unjust” and in need of his “change.”
This is all to say that Barack Obama has treated American enterprise as a whipping boy, subject to his and his party’s penalties, requirements, fees, fines and demands. He has created an environment where it has become very risky for businesses to employ anybody – and he has created a huge disincentive to take new risks and to begin hiring new workers.
Now, the President’s most loyal followers seem genuinely surprised that after roughly thirty months in the White House, he hasn’t “created more jobs.” But the “loyalists” would do well to ask a business owner this question – instead of the President himself.
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