Jobs come from business decisions, not diktats from Washington.

Behold the reason there are no jobs: imported wood on Gibson guitars.

It’s no wonder unions are falling in influence and respect in this country when they’re led by people like James Hoffa. On CNN’s States of the Union show yesterday he said a number of things that belie a basic ignorance about how jobs actually are created.

A few items:

1) He suggested that American companies have an “obligation” to hire American workers, irrespective of the economic realities that may suggest otherwise. Corporations exist to generate a return on investments, not simply to hand out paychecks. The latter happens with the former, but doing too much of the latter without due diligence to the former brings about melt-downs like the evaporation of the U.S. steel industry.

2) In one breath he acknowledges that, “So far, what we’ve done [to reduce unemployment] hasn’t worked.” And then in the next breath he expects a bold plan from the President to change this. What we’ve done is a whole lot of deficit spending in true Keynesian fashion, and the President knows nothing but Keynesianism, so fat chance getting anything “bold.” But Keynesianism does not work because it cannot work: it ignores the realities of human motivations and activity, and assumes a greater degree of control on the part of the government leaders than they actually possess. So while Hoffa gets the first part right, his solution is the hair of the dog.

3) He laments that the folks in Washington are spending too much time on deficit reduction and not enough time on getting the economy going again, as though the two things are mutually exclusive. In fact the opposite is true: part of the chilling effect on U.S. economic development is government debt. Investors, domestic and foreign, would relish a sign that the federal government is serious about fiscal responsibility.

4) He bizarrely called for “increased pressure” on business, as though the reason businesses aren’t hiring is because the government is not breathing down their necks *enough.* What sort of pressure would compel businesses to hire? Greater taxation? Increased regulation? Persecution for not adhering to socialist/unionist diktats? More capricious enforcement of laws domestic or foreign? Any or all of those will most assuredly have the opposite effect, costing businesses more money for compliance or litigation, money which then cannot go to hiring new employees, or possibly to sustaining present levels of employment and profitability.

Businesses are not hiring because the conditions are not favorable to do so. Some don’t have the cash on hand or demand for their product to hire new employees, while others who have the cash are spooked and find it more prudent to sit on their cash until conditions improve.

Says the ever-perspicacious Victor Davis Hanson,

In the last 30 months, the Obama administration has created a psychological landscape that finally just seemed, whether fairly or not, too hostile to most employers to risk new hiring and buying. Each act, in and of itself, was irrelevant. Together they are proving catastrophic and doing the near impossible of turning a brief recovery into another recession.

Here is the lament I heard: the near $5 trillion in borrowing in just three years, the radical growth in the size of the federal government and its regulatory zeal, ObamaCare, the Boeing plant closure threat, the green jobs sweet-heart deals and Van Jones-like “Millions of Green Jobs” nonsense, the vast expansion in food stamps and unemployment pay-outs, the reversal of the Chrysler creditors, politically driven interference in the car industry, the failed efforts to get card check and cap and trade, the moratoria on new drilling in the Gulf, the general antipathy to new fossil fuel exploitation coupled with new finds of vast new reserves, the new financial regulations, an aggressive EPA oblivious to the effects of its advocacy on jobs, the threatened close-down of energy plants, the support for idling thousands of acres of irrigated farmland due to environmental regulations, the constant talk of higher taxes, the needlessly provocative rhetoric of “fat cat”, “millionaires and billionaires,” “corporate jet owners,” etc. juxtaposed, in hypocritical fashion, to Martha’s Vineyard, Costa del Sol, and Vail First Family getaways — all of these isolated strains finally are becoming a harrowing opera to business people.

Despite enormous opportunity for many cash-rich firms to take advantage of the down cycles (low interest, plentiful potential employees, discounted prices, etc.), they are taking a pass, almost as if to collectively sigh, “This bunch doesn’t like me much and I’m going to hunker down, hoard my cash, and sit out the next year and a half until they are gone.”

(A recent horror story Hanson does not invoke is the raid on the venerable Gibson Guitars for possibly,but not really, violating some laws on the books in India concerning use of certain kinds of imported wood. An official of the Department of Justice, apparently trying to be helpful, reportedly told the CEO of Gibson that he would avoid such legal issues if he moved his operation to Madagascar or India.)

Business growth and new hires implies risk and new investment. When the regulatory, enforcement, and taxation regimes are both negative and in flux, why on earth would businesses take risks, invest, and, yes, hire new people?

But Hoffa and so many others just see bogey men in the corporate suites and expect the solutions to come from Washington.

Hoffa is looking for a “bold plan” from the President on the jobs front. At this point, a bold plan would look more like what Jon Hunstman just proposed: a massive overhaul of the tax regime, elimination of many loopholes, elimination of taxes that needlessly increase the cost of doing business, and significant regulatory reform/reduction.

In short, the “bold” move would be for government to get largely out of the way.

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3 thoughts on “Jobs come from business decisions, not diktats from Washington.

  1. Joe M says:

    Sadly, I don’t think that we’ll ever be rid of these crazy notions expressed by one Hoffa or another. — No matter what kind of problem our society faces, there is some explanation already fashioned that blames it on the successful. Worse, we will always have a contingent of people intent on believing these explanations, since the only thing preventing them from becoming Bill Gates themselves is Bill Gates. Finally, worst of all, we will always have enough political elites that are unscrupulous enough to sell these whacky notions (that the majority of them must know better than) for political power.

    1. Tom Crowe says:

      Joe M — In part, I don’t think it’s a matter of unscrupulosity, but of hubris. They really, really, really believe their own hype (“we are the ones we have been waiting for”) and believe that they really can control things and if they just get the power to control this and that part of society and the economy then they will make everything better for all us nincompoops who just don’t know what’s good for us as well as they do. It’s a power grab, but not necessarily for the sake of accruing power, more because they are so sure that they know better.

      1. Joe M says:

        Tom. I actually deleted a few sentences from my comment that noted a similar point. That we’ve moved from people that have used these ideas to gain political power (Clinton) to people who actually believe it (Obama). — Check this video out: http://www.youtube.com/watch?v=D3N2sNnGwa4 Starting around 28:50. How far away are we from when our leaders would have a frank debate about issues like this? Our politics has become about picking sides more than figuring things out. More Bloods vs. Crips than Lincoln vs. Douglas. People know the position they are going to take before an opponent has made an argument and presented evidence. This is really a dangerous time for us economically when so many people have abandoned objective reasoning.

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