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Monday, October 24, 2016

Regulations And Taxes Not To Blame For Jobs Crisis

It’s clear that something needs to be done about jobs in the United States, but effective change requires that people understand the roots of the unemployment crisis. Democrats, Republicans, economists, and pundits have all offered their own theories about the causes of the jobs problem, and they have subsequently proposed different solutions; however, some of these ideas seem to be based more in political ideology than in reality.

Many Republicans are holding on to their core belief that businesses are reluctant to expand because of more regulations and higher taxes. Presidential hopefuls have echoed this claim: Rick Perry has directly criticized the Obama Administration for hurting jobs through enforcing too many environmental regulations, and Mitt Romney’s jobs plan “seeks to reduce taxes, spending, regulation, and government programs.”

This argument, despite being repeated regularly by conservatives, lacks evidence. A recent study by Lawrence Mishel of the Economic Policy Institute solidly debunked the myth that uncertainty about regulations is a main obstacle to businesses expansion. He writes,

An examination of current economic trends, and especially what employers are doing in terms of hiring and investment, debunks this story about regulatory uncertainty as the cause of our dismal job growth. An examination of what employers and their economists are saying again and again in private surveys… makes it clear that what businesses actually identify as their primary set of challenges does not fit this story either. In other words, what the heavily politicized trade associations in Washington are saying does not correspond to the real challenges facing both large and small businesses, even as they themselves perceive them.

So if the dominant conservative economic diagnosis is wrong, what is causing the jobs crisis? According to economist Paul Krugman, the issue is more about consumer spending and less about government regulations. Such periods of unemployment are normal following recessions. Business leaders are still complaining about taxes and regulations — as they usually do — even though poor sales numbers are actually a greater concern at the moment. Krugman wrote in The New York Times,

After all, why should businesses expand when they’re not using the capacity they already have? The bursting of the housing bubble and the overhang of household debt have left consumer spending depressed and many businesses with more capacity than they need and no reason to add more. Business investment always responds strongly to the state of the economy, and given how weak our economy remains you shouldn’t be surprised if investment remains low. If anything, business spending has been stronger than one might have predicted given slow growth and high unemployment.

As Krugman writes, one should hardly be surprised that the Republican Party is ignoring evidence in the jobs debate: “Partly, no doubt, this reflects the party’s broader slide into its own insular intellectual universe. Large segments of the G.O.P. reject climate science and even the theory of evolution, so why expect evidence to matter for the party’s economic views?”

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  • Citizen7

    All corporations invest. Investing is and always has been a risk. Investing in employees is no riskier. Why won’t they view adding jobs as an investment in their future sales? We all know that corporations work together as a union. They all hire and fire together at the same time. So if they did that, the public would gain confidence in the economy. Those that have been working would decide to buy a home, or car, or go on vacation. And those that have just been hired would go shopping. Voila. The problem would be fixed. The real problem is that corporations JUST DON’T WANT TO.


    If regulations are done away with we can just kill and injure more people. More canelopes can be grown and nobody will know how many are killed. Speed limits can be done away with and more deaths. Highways can be left alone and more deaths and injuries, Seat belts, air bags, etc., can be done away with and more deaths and injuries can occur. Meat will not be inspected and more deaths and injuries will occur. I could go on for the rest of the day with examples. However, we would be able to reduce the population in the U.S. and would not need as many doctors, hospitals, housing, food, etc. Brilliant idea to do away with regulations. We can return to the old west and carry a gun with us all the time and practice our fast draw so we can live an extra day.

  • P Lewis

    The new IRS regulations are way too costly for my young preparers. I closed my little business because of all the new regulations. Many who hire young college students will follow my lead. The fees and rules are unnecessary and very costly. When tax season comes, there will be six students looking for something else to do.

  • TomS

    Could it be that we’ve forgotten the lessons we learned some 40 years ago? Remember when the hot topic was overpopulation and how to control it? Everyone had a solution, but then we all just forgot about it. Nothing’s quite so cold as yesterday’s hot issue. How can earth sustain life for more billions of people? As our population increases, the condition of our environment declines, the quality of our lives declines, our health declines, and our economies fail. I truly believe overpopulation is the root cause of many of today’s problems. Anyone care to agree?…

  • CMasterson

    I propose we REDUCE the burden of regulations that form a barrier to new businesses and on a temporary basis. Our current regulatory quagmire could be cleared up for new businesses for a limited time. In fact, a new simplified tax option would be great for everybody as well.

  • Paul Lander

    I strongly believe that evenually over population will be the downfall of our current civilzation if rational minds do not prevail. It is very likely that by the end of this century civilzation will break down in chaos. Perhaps then, a small group of enlightened survivors will band together in an attempt to create a new civilzation, with a more altruistic outlook.

    • plusaf

      Thank you! For the past year or more, I’ve been saying this: If you look at virtually EVERY issue that’s in the headlines or that people are up in arms about or suffering from, nearly all of them can be traced back to a root cause of “too many people”!

  • AnnaSolomon

    Is the real problem here. When Corportions began shipping their manufacturing jobs overseas for cheaper labor and then importing those goods back to the US for sale for larger profits it turned our economy from a manufacturing one into a consuming one. Until we return to being a manufacturing economy we will continue to see this decline. Other than service industries like grocery stores, gas stations and professionals, like teachers, doctors, etc, we make less and less. We have farmers being paid to grow nothing while there are starving people in other conutries. Pay these farmers to grow food for them instead.

    Corporations are holding back from hiring and laying off more workers for one reason only, they are holding the American people hostage. They are afraid of losing their profits and the prospect of having to pay their fair share of taxes. So by crippling the economy they make President Obama look bad, in hope they can get one of their Republican Puppets elected so that their little ponzi scheme can continue to operate.

    The American people have a lot of power when it comes to consumerism. Buy only American made/grown food and items. They may cost more but they keep you or your neighbor employed. Don’t support the system that is causing the problems.

    These Corporations are destroying the fabric of our country out of greed. They are putting millions of people out of work so they can replace the man who is trying to fix the mess of the previous administration. The one that pushed us to the brink of collapse. Any President who was elected in 08 would have to be dealing with this mess. They don’t want the mess cleaned up. They want to take away women’s right to choose, civil rights for gays and lesbians, financial and health assistance for the elderly, education for our children. With these policies we would become a society very much like the middle east. Ironic isn’t it.

    • plusaf

      Anna, have you ever worked for any large corporation or managed a team that works for one? I have, and I find ALL of your assertions to be grounded in unreality.

      Corporations or even small companies do not exist with the purpose or goal of “hiring people.” They exist to deliver goods or services to the market and, if they’re good at it, make enough profit to sustain themselves and grow.

      Anything else is liberal fantasy. They DO offshore jobs to make more profits and lower costs, and if they can do that and reimport less expensive goods back into the US, EVERYONE who chooses to BUY those goods (note: chooses, NOT “is forced to), gets to keep more of THEIR hard-earned cash in their OWN pockets to buy OTHER things they want or need.

      If you want to fight greed, fight the people who are greedy. Corporations aren’t greedy. They do not breathe, eat, think, walk or talk OR screw people over. If their EMPLOYEES are greedy and do stupid things, show THEM sunlight.

  • Durdy

    I’ve got an idea!… Why don’t the powers that be (on all sides) campaign in the name of truth instead of spreading accusations and paranoia? Quit slumming on the opponent and start talking about improving the Nation for it’s citizens and not for the advancement of the party. Am I living in a fantasy world? Probably.

  • texan1944bcs

    As a Texan I have had to live under Bush’s and under Perry. Both say one thing before an election that they are going to do more for improving education, improve welfare problems, heath care for the poor, I could go on and on with the promises that they have not addressed in the past. Both have said that they have created jobs, if so why is Texas having slow growth and high unemployment. Why do we Texans have to pay for Perrys rent of a High style, High Cost Rental, this is correct just check out where he is living. Why have school text books teaching more about things that really serves Bush and Perry Republican policies. Where has the common ground gone? Why has Perry reduced funding to MHMR, and scaling back programs that are good for children who’s parents cannot afford their childrens needs. Ever wonder how Perry knows alot about ponzi schemes, just checkout the end around in that he runs when it comes to taking away financial and health assistance for the elderly, the education for our children. Checkout the loop holes he creates to increase land taxes after a elderly couple turns 67 years old. You know I could go on and on how his ponzi scheming works, what would really work for the people of Texas is for them to stand up and ask questions when something is a concern for them. You maybe thinking I am a Democrats, well I’m not, and I am not a Republican, I’m an Economist. I look at the books that are kept, than I look at the facts in how the Economy is fairing. What I would like to do is take a look at the second set of books that Perry is keeping. That won’t happen in my time, mainly because Bush-Perry Republican machine will just keep brainwashing the people who go to church. Think about this, praying to God for rain, and than a Tropcal Storm is just a few miles off the coast of Texas goes calm without producing not even a breeze, not evn a drop of rain…I would think that God was trying to send a message to someone who does all the praying, and not any of the listening. What I am saying just checkout the record of Perry’s Fantasy thinking that he is God. I am just saying that I see something, and I am saying something to you. Take A Real Good Look At Records…above all Think for Yourself fellow Texans.

  • ggodfrey

    Isn’t it interesting that the people who say government needs to stay out of the way of business now say that the gvt. needs to step up and do more to create jobs. If business stopped giving overtime and hired more workers, that alone would help a lot.

  • kurt.lorentzen

    The feedback on this article is very logical and shows that people are beginning to understand what’s happening. All of the things you folks talked about (EPA regulations, IRS regulations, over population) just go to show the depth of involvement on the part of us ordinary Americans. Krugman points out the obvious without offering any kind of solution. And the article’s author just re-hashes the old chicken/egg argument that also solves nothing. No evidence? Really? So those businesses that keep moving jobs offshore, hiding profits offshore, closing their US operations and laying-off American workers doesn’t qualify as evidence? A consistent tax code and reduced regulatory burden will absolutely light a fire under the economy and get people back to work. AnnaSolomon nailed it when she said “Until we return to being a manufacturing economy we will continue to see this decline”. I suppose Krugman offers his analysis in support of Obama’s Jobs Plan. But the Jobs Plan amounts to yet another “Hail Mary” (the first being the first $780 Billion stimulus). Government money is not money in the sense that it represents no creation of value – it’s source is either taxes or debt. And all of Obama’s “jobs” are financed by government money. Sure, it’ll temporarily elevate consumer spending – right up until the appropriations run out. And then we’ll be left with as much or more unemployment plus the debt incurred by the “jobs plan”. Cut spending, cut waste, and feed the manufacturing sector. These are the only things that will lead to long-term prosperity