The president needs to adopt the Founders’ view of human nature. Otherwise, he will continue to dictate economic policy through a regulatory and tax regime that flattens job creation.
The economic news for July was disheartening. While we can all be glad that nearly 120,000 more Americans are employed, the jobless rate nationally remains at more than 9 percent.
The picture is even more disturbing when one examines it closely: According to the federal Bureau of Labor Statistics, “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers” now stands at more than 16 percent.
Things are even worse in some communities. According to a Pew Research Center, African-American unemployment is 16 percent; when black underemployment is factored in, that number rises substantially.
There are blueprints for economic growth readily available to the public and policymakers alike. Some are sounder than others, of course, but the one non-variable that should be incorporated into any serious plan is the unchanging reality of human nature.
In “The Federalist Papers,” James Madison wrote, “As there is a degree of depravity in mankind which requires a certain degree of circumspection and distrust: So there are other qualities in human nature, which justify a certain portion of esteem and confidence.”
In other words, the Founders recognized that man is a fallen being, yet capable of nobility and courage. Thus they inaugurated a new republic based on the premise that people of virtue — people who governed their own individual lives well — could wisely and justly govern themselves collectively.
How does this relate to unemployment and jobs? Simply in this way: Human nature does not appreciate manipulation. When the federal government seeks to micromanage so many facets of American economic life, believing with unjustified confidence that the brilliant and beneficent minds of the central state can best guide the lives of the Great Unwashed (that would be us), people react to it negatively. This includes, of course, the owners and investors of companies of all sizes.
That’s what has happened under Barack Obama. As one recent study concluded, “(T)he Obama Administration imposed 75 new major regulations from January 2009 to mid-FY 2011, with annual costs of $38 billion. There were only six major deregulatory actions during that time, with reported savings of just $1.5 billion. This flood of red tape will undoubtedly persist, as hundreds of new regulations stemming from the vast Dodd-Frank financial regulation law, Obamacare, and the EPA’s global warming crusade advance through the regulatory pipeline.”
Some regulation is prudent, but excessive regulation is stifling. For example, crushing environmental regulations have contributed to a substantial decline in America’s mining industry. The U.S. Geological Survey reports that in 2008, we relied on other countries for 100 percent of 18 of 61 nonfuel mineral commodities and were more than 50 percent reliant on other nations for 44 of 61 minerals. This amounts to roughly seven percent of the total annual U.S. economy.
Page 2 of 2 - The result? The high costs of regulation, litigation and politically based public policy discourage businesses from hiring new people and trying new ventures. Consider the president’s multiple attacks this summer on the accelerated depreciation allowance for private jets: It makes for great class warfare rhetoric but would destroy jobs among private aircraft manufacturers.
Prohibitive tax rates discourage job-creators from investing in personnel or providing greater compensation. Intelligent people dislike being hemmed-in by antagonistic, insistent bureaucrats, become increasingly averse to expanding into highly regulated domains and respond by holding steady or even contracting rather than expanding their companies.
President Obama and his economic team need to adopt the Founders’ view of human nature. Otherwise, they will continue their strident efforts to dictate economic policy through a regulatory and tax regime that flattens job creation. That means anemic growth, fewer jobs and bigger government - hardly a formula for economic success.
Robert Schwarzwalder is senior vice president for the Family Research Council in Washington, D.C.