Josh Dowlut's  Instablog

     President Obama stated that his New Year’s resolution is “to do everything I can to make sure the economy is growing, creating jobs, and strengthening our middle class.”  He is either incompetent, corrupt, or some combination of both.  If he truly were dedicated to “doing everything to grow the economy,” he would turbo-charge small business creation and growth with the following:

• Deregulate:  Eliminating needless federal regulations would have the same stimulative effect as a $650 billion/year tax cut, enough to grow GDP 10%, and reduce unemployment 3%.  The cost of federal regulation has been estimated as high as $1.75 TRILLION (14% of the entire economy) with a disproportionately high burden on small business, and as low as $843 billion as of the year 2000.  Environmental and workplace safety regulations (the only regulation aimed at correcting negative spillover effects such as pollution) account for only 1/3rd of this cost.  The remaining 2/3rds fall under tax compliance and economic regulations.  Deregulation at the state level would also provide a boost, and it is at the state level where most of the purely anti-competitive regulation is found.  Virtually every case study of state level business regulation (such as occupational licensing) reveals it to be created and perpetuated by cartels whose aim is to stifle competition and keep their prices up, as opposed to some public outcry caused by harmful business practices.  
• Exempt small business from the payroll tax:  Current tax law imposes a 7.5% surcharge on labor paid for by the employer.  Smaller, start-up businesses usually have not achieved the economies of scale that larger, more established businesses have.  This puts them at a competitive disadvantage relative to larger businesses.  Exempting this surcharge cost would serve as a “business incubator” and allow more businesses to “grow-up” to compete against big businesses.  The unemployment rate would drop by approximately 1% based on the price sensitivity of labor demand alone, and another 2% drop based on the tax cut multiplier combined with Okun’s law.  The combined effect, on top of the deregulation effect, would drop the US headline unemployment rate to the full employment range of 4-5%.
• Reign in intellectual property law abuse:  Patents, copyrights, and trademarks use the force of government to prevent innovation, improvement, and progress.  The scope and duration of these monopoly protections have expanded over the years while the burden of proof has shifted from the IP holder, to the party accused of IP infringement.  Scaling back IP law would allow more new business formation and growth.  Intellectual property law is the monster that created the RIAA shakedowns, one of which resulted in a $675,000 judgement against a man who downloaded 30 songs.

     The current position of each aforementioned policy area serves to do two things:  Reduce total wealth, and concentrate that wealth in the hands of the few and the powerful.  It is a giant boat anchor shackling the entire US economy so that a few may enjoy a comfortable existence while the rest of us try to drag that anchor forward.  There is only one reason why these programs perpetuate:  The concentrated benefits vs. diffuse costs of public choice theory.  They exist because the few that they favor are powerful enough to pay politicians to protect them, and the cost for any average person to fight this would far exceed the cost this orchestrated theft imposes on that individual.  Every single one of these programs robs pennies from the masses to put dollars in the hands of big business and politicians.

     There are also some distinct policy failures that should be abandoned if the President were truly serious about his resolution:

• Spending money we don’t have:  The deficit is being monetized which moves the cost of spending money we don’t have from the next generation, to the next month.  Higher food and fuel prices are showing that you can’t increase real wealth by printing money.  You can only redistribute it upwards.
• Temporary fixes for permanent problems:  Call your tax policy permanent.  Regardless of what level tax rates are set at, if the public perceives them as temporary, investment decisions will be made accordingly.
• Bailing out the reckless and the foolish:  From banks, to automakers, to state governments, it seems everyone is too big to fail.  Gordon Gecko was wrong:  Greed is evil.  Competition is good.  Too big to fail=no competition.  No competition=unchecked greed which equals unchecked evil.  The cost of the bank bailout is far greater than corporate media will let on and that which was “repaid,” used some shifty smoke and mirrors tricks and one sided accounting.

     We must breakdown that which forcibly prohibits men from starting businesses, growing businesses, and providing otherwise legal services in exchange for money.  Maryland will file criminal charges that carry jail time for hanging drywall, cutting hair, or applying makeup without the required state license.  Missouri won’t allow a man to start a new moving company unless he first gets permission from the existing moving companies he will be competing against.  Until President Obama is standing on his desk screaming at the top of his lungs about these injustices, he is merely a member of the exploitive ruling class giving lip service to the masses with his intellectually disingenuous resolution.