Friday, December 3, 2010

Reversal in Job Creation

The latest jobs report is another sign that the economy is not recovering, despite early leading positive indicators of stock market activity, consumer sentiments, and manufacturers' inventory.  The data tells us that job creation, a lagging indicator of recovery, is still a long way off. It is unlikely to reach pre-recession levels due to the realignment of work processes and organziational structure to reduce headcount.  Combined with the anticipated financial burden from the healthcare bill, employers are likely to balk at adding jobs, prefering rather to control capacity and raise prices.

What to do?

The continuing debate in Congress over tax cuts should end.  The tax cuts should be made permanent, combined with serious permanent reductions in government entitlement programs.  This will make more money available for investments and consumption, the primary drivers of job creation.

Second, rules and regulations at the Federal, State and County levels that slow the registration of companies, the creation of factories, and the distribution of products and services should be permanently eliminated. These include scientifically questionable environmental legislation, restrictions on mining and other natural resource extraction activities, legislation that limit labor mobility, and non-production related taxes on small and medium size enterprises.

Why these changes?

Production begins with investment.  Such moves send strong signals to would-be investors from around the world that the U.S. is once again serious about wealth creation, and free market capitalism that rewards individual and corporate risk taking. 

America needs to reopen for business. America needs to stop flirting with that unfaithful mistress called socialism.

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