It’s a common refrain among progressives when criticizing free-market economic policy – “Conservatives are out of touch”. Conservatives don’t know how to create jobs, the progressive echo chamber booms. What we need to do is to spend our way out of the recession President Obama announces. The only people who think that government stimulus doesn’t work are at Conservative think tanks like The Heritage Foundation they go on.
In this, as in so many other things, progressive policy analysts are out of touch. In reality, hundreds of experts agree from across the political spectrum that deficit spending by government to stimulate the economy is ineffective as a cure to recessions and may actually cause many more economic problems.
An article in this week’s Barron’s magazine (January 18, 2010) is further evidence of widespread dissatisfaction with current economic policy in Washington. In the magazine’s bi-annual roundtable discussion with star investors, panelists appear to agree on one thing: the way Washington is responding to the economic crisis is contributing to the poor economy.
• Scott Black the Founder and president of Delphi Management in Boston says. ”Much of the job creation in the past 10 or 20 years has been in small businesses. It hasn’t been in big corporations that lay off 10,000 or 12,000 workers at a time. The Obama administration’s health-care proposals could add substantial surcharges for these businesses. Marginal tax rates are going way up, which has created a lot of uncertainty for business. That’s one reason you haven’t seen a lot of new job creation.”
• Mario Gabelli, the Chairman of Gamco Investors injects, “Small businesses have had trouble getting credit, and are uncertain about the added burdens of health-care reform.” The Barron’s host tells Gabelli that he acts as if the decline in jobs started with the introduction of the health-care bill. To which Gabelli says, “We are talking about why small businesses haven’t added workers in the past 12 months. Can I make money with that incremental employee?”
• Meryl Witmer, General Partner at Eagle Capital Partners interjects, “Yeah, what is it going to cost? In the past six months, whenever I have talked to a company I asked the chief executive or chief financial officer what it would take to bring jobs here. They said, ‘You know, the workforce isn’t that good, and there is so much regulation. I’m moving jobs out of the U.S.’ The government needs to cut back on regulation and taxes and open things up for business, or the jobs will continue to leave.”
• Scott Black later adds, “Nonresidential construction should have come back under the stimulus program, but it didn’t. The government budgeted $787 billion, including $40 billion for infrastructure, and yet very little of it has been spent. According to the trade associations more than $2 trillion of roads and bridges need to be built. The [Franklin D.] Roosevelt administration hit the ground running in 1933. It thought jobs were the best social policy. President Obama, instead of pursuing both health-care reform and cap-and-trade legislation, should have been putting American’s back to work.” The fact that infrastructure spending took too long to help mitigate the recession comes as no surprise to readers of this Heritage Foundation report. For more from the Barron’s panel of experts see this video.
Of course, the Roosevelt administration’s jobs programs didn’t work either. What Congress and the Obama administration should do to reduce unemployment is outlined nicely in a Heritage Foundation WebMemo here. They should make sure they are not throwing up barriers to hinder small businesses from hiring workers, or achieving success.
