Notes on the Economy – 02/1/11

Competing with Handicaps

President Obama is right, it is our “entrepreneurship” that sets us apart and is the driver behind our success as a nation.  And we do have some of the very best “entrepreneurial athletes” in the world and they love to compete in the “global economic Olympics”.  What we wonder is why the “coach” handicaps the team of competitors as he urges them on to victory?   The President seems to have decided what “events” we should compete in rather than relying on “comparative advantage” and entrepreneurial vision.  And handicaps?  Lead weights on the ankles of our competitors.

Government is to insure that 80% of our electricity will come from clean (read more expensive) sources, 80% of all citizens have access to high speed rail (check out how unsuccessful these projects have been to date, more money wasted), 98% of all Americans should have high speed wireless service (nice, but what is the added value?).  Comcast was required to provide high speed access to 2.5 million people for less than $10 a month and provide communication devices for less than $150 to get approval of their NBC acquisition.  Regular taxpayers have to pay Volt purchasers $750.  Apparently there is not enough incentive to develop batteries so consumers will be taxed to get the job done.  Why is there a Highway TRUST Fund?  Does that mean that all the tax money we send in is not spent on roads and bridges but is “loaned” to the Treasury (check out the “social programs” that are included in Trust Fund expenditures).  Tax incentives to develop new oil and gas of $4 billion should be removed, but Congress added $6 billion in new subsidies for corn ethanol, already proven to be a financial as well as ecological disaster.  The new “Jobs Czar”, Jeff Immelt, thinks that the answer lies in exporting and manufacturing and will recommend a tilt in that direction (GE is not exactly a job generator and was a big player, loser, in housing bubble finance, the kind of jobs the President envisions?).

The government is supporting unionization, through legislation and regulation, and raising minimum wages, measures that reduce labor mobility, eliminate jobs and job market experience and permit a few workers to overcharge for their labor services at the expense of ordinary folk paying too much for their products (do GM and public sector unions come to mind?  Labor law gives unions the power to tax and prevent measures that raise worker productivity).  Congress wanted to raise taxes this year?  How does that help us compete?  How about the billions of hours we spend filling out tax (and other) forms?  Small business owners always list “unreasonable red tape and regulations” as one of their top problems.  Sadly, this lament could go on and on.  The point is, the government does much to handicap our entrepreneurs and little to encourage them.  It could be different and if it were, we would be much tougher and more successful competitors.