You’ve heard it over and over again: “if only government would get out of the way, and let the private sector operate as is should all would be right with the American economy”. The recession could be ended; folks would be back to work; and our nation would once again prosper. A nice thought…but patently untrue! Indeed, it has been the private sector (not government) which has brought us to this fiscal malaise, if not crisis; and it is the private sector which is not helping us out of it, especially with job creation.
First, a brief disclaimer. If you think this is some left wing rant from an anti-captialist ideologue, you would be dead wrong. I have spent over 50 years of my professional life as owner of several of my own businesses. I understand Capitalism, flawed as it might be, is the best system we have. I am entrepreneurial to the core. I have put my own money at risk numerous times to develop and build businesses. But it is my interest in seeing this economic system work that brings me to this conclusion. The private sector has brought down our economy, and it must be called out on this failure – especially if we are to make things better going forward.
Starting with the Far Right’s claims that government interference, and especially taxation that is impeding our recovery, just has no basis in fact. The truth is there is nothing – nothing at all – which is preventing, obstructing, retarding or impeding American business from creating jobs, except American business itself. Taxes have been low. Interest rates are low. Regulation is provably lax. Major American corporations are loaded with cash, but they have learned that they can scrape along with higher productivity by stressing their existing staff, rather than add jobs. Another possible use of their resources is to buy businesses (or buy back their stock) with their cash – a consolidation which does not add jobs, but more likely eliminates them.
What then about the claim that it is taxes that are job destroyers. How so? American businesses actually have been operating under all the previous Bush tax cuts for 10 years now, and look where that action has taken us. Job creation is sparse…deficits have soared…and no new taxes have been imposed. The argument is disingenuous.
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Conservatives and the business community make the claim that it is “uncertainty” harming job creation. Give me a break. If you think today’s environment is “uncertain”, you did not live in the Great Depression (or many others in our history). You missed WWII. You forgot about the times when mortgage rates got up to 20%. You skipped the turmoil and discontent of the Viet Nam War. In fact, in the context of history, today’s times are more tranquil and predictable than most. “Uncertainty” is a cop out.
But what about all those onerous government regulations that impede business? This year alone we have had an egg recall that sickened hundreds. A horrible mine disaster. An oil spill that damaged an entire sea. A sparsely regulated health care industry that brought us mediocre care with exorbitant prices. And the worst one of all that festered for decades, and came to the fore in the Bush years: a Wall Street collapse that brought our economy to its knees. Over regulation? Not only is there no evidence of this, more likely there has been lax regulation in recent years that has put our citizens, our environment, and our economy at risk. The real issue here is that the private sector has little incentive to self-regulate, and strong incentive for laissez faire.
Well, regulation aside, perhaps the government is just too intrusive and obstructive – a claim we hear constantly in this election year. There is an irony here that needs to be called out. Starting with the Wall Street meltdown, when it appeared that our nation’s economy was about to collapse, the Bush administration came to Congress and literally begged for Federal help to bail them out. Thus came TARP. Government interference? No, government to the rescue! It is generally conceded it saved us from dropping into a severe depression. When Katrina hit New Orleans, the common complaint was Federal response was too slow – not that the government was intruding. Similarly, when BP poured oil into the Gulf, the very people who complained most loudly about government being “too big”, could not get enough Federal help fast enough to save their skins (and that of their citizens). Bobby Jindal, Louisiana Governor, just a few months earlier in a response to a State of the Union speech had railed mightily against “Big Government”; now he wanted more Federal government…and fast!
When you synthesize the reasons why American Capitalism is failing us, there are several to consider. First, the greed factor, which has resulted in a continuing mal-distribution of income, depriving the system of bottom up demand. Secondly, American corporations have a skewed set of loyalties and priorities: first to their top executives…then to their shareholders…then to the nation…and finally the taxpayers. Despite Citizens’ United, corporations are not individuals, and thus have a very limited social conscience. The result of this is they have no compunction against paying outrageous salaries to top management vis a vis their lowest paid workers (unlike Capitalism in other industrialized nations); nor do they have any restraint on shipping American jobs overseas to enhance profits. None of this “adds jobs” to our economy, government actions notwithstanding. This is strictly the private sector’s MO.
The solutions of all these factors are complex, but soluble. But demonizing government, as conservatives (and especially the U.S. Chamber of Commerce) are now doing, is definitely not part of a solution. And, until or unless people of goodwill concede that there is a role for both government and the private sector in responsible and vibrant Capitalism, and the best path for economic health is a cooperative partnership between both entities, then the amelioration of tensions that are damaging our economic recovery will not be forthcoming, and further decline appears inevitable.