Cut Out the Middle Man – Government

It is beginning to dawn on politicians that economic recovery does not necessarily mean a return to previous levels of  employment: many of the jobs that have been lost had been marginal for some time, and the recession was only the coup de grace – those jobs are not coming back, at least not in the same country.

Our leaders have also finally accepted the well established fact that small businesses, especially new starts ups, generate most new jobs. So all parties are suddenly proclaiming how much they want to help us.

That is very nice – if a little late – but, having neglected us for so long, they have no idea what we really need.

President Obama, for example, has proposed “giving” small businesses $5,000 for every new job.

Thank you very much, Mr President: no one is going to turn down five grand – which is, of course, why the policy will make no difference to job generation. Those businesses who were going to employ new people anyway will happily pocket the cash, but a measly five thousand is not going to be enough to persuade anyone to establish a new post if they were not planning it already.

Viable jobs can only be generated by viable businesses. A business is only viable if there is a market to support it. Giving taxpayers’ money to unviable businesses does not make them viable. It only obscures their real problem, which is the lack of a market. Meanwhile the act of taking the money in question from the taxpayers means taking it from viable businesses, the businesses with the potential to generate real employment if they had kept the money.

In any case, what government gives with one hand, it takes with the other. Even as Mr Obama is offering federal taxpayers’ money to business, payroll taxes in many states are increasing to cover increased unemployment.

In addition to being economically inefficient, this pointless recycling of our limited resources imposes four additional administrative burdens: government must employ bureaucrats both to supervise grants or rebates and to collect payroll taxes; and employers must waste more time on both grant or rebate applications and tax forms.

If government really wanted to help business, it does not need to give us money – it simply needs to take less from us.

Politicians cannot generate viable employment. We can – if only they let us.

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