The Fatuous Job Summit

Obama's amazing confession: He doesn't know how jobs are created. Cutting government burdens on business is a sort of Masonic mystery to him, apparently. If the summit had been solely focused on how to reduce the costs of business it might have been useful

What are the odds that yesterday’s White House jobs summit will lead to the creation of any real jobs? The summit was based on the magic theory of government: Say the right incantations and reality will be reshaped according to one’s desires. There are no economic laws. There is only will. If we all think good thoughts and exude the spirit of cooperation, we’ll end these hard times and get the economy moving again. This is the sign of a primitive mentality. In reality economic laws exist, reality sets limits, and good feelings can’t create prosperity out of nothing, especially when government stubbornly stands in the way....

The downward employment spiral we have witnessed is an effect, not a cause, of economic trouble. People were laid off and consumption slowed down, with rippling effect, because of earlier bad policies. In the current case, government housing policy and Federal Reserve conduct united to create unsustainable distortions in finance, construction, and allied industries. When the boom came to end and the bubble burst, what looked like rational investments were revealed as errors that needed to be corrected so that the market process could get back on its natural track. This takes time. Decisions cannot be instantly and costlessly reversed. There’s too much construction equipment and not enough of something else, but that cannot be rectified overnight. Capital was wasted in the boom, and new saving is needed not just to replenish the capital stock but to make sure it’s the right kind of capital.

But the policymakers won’t let the market heal itself. Why? Because letting it happen means doing nothing —or rather undoing lots of things— and politicians are incapable of that. Imperative No. 1 is to get re-elected. Whether a politician understands economics or not, the electorate for the most part does not. So he caters to the economic illiterates by appearing to boldly take on problems that were created by his earlier takings-on. Almost any policy he backs will be opposite of what ought to be done.

The two things that government needs to do are exactly what politicians find so distasteful. It must 1) dramatically lighten its burden on the people and 2) abstain from causing producers to wonder what new burdens may be around the corner.

The burden of government is great. This is to be measured not in taxes alone, but in total spending, mandates, regulation, and Federal Reserve distortion. Politicians and special interests have lived as though the burden could be increased indefinitely with impunity. We see now that it can’t. Spending must be substantially cut — departments and agencies abolished — so that resources can be left in the productive sector. Taxes must be reduced sharply — better yet, repealed. The heavy hand of bureaucracy must be lifted from production. Government is a destroyer, not a creator, of value. It must stop....

The root problem is the privilege-ridden corporatist economy that shifts power to politicians and the politically connected. This has only gotten worse in recent years, with the Fed and Treasury directly guiding the flow of capital to favored companies. Abolish the privilege, the subsidies, the barriers to entry, the impediments to self-employment, the currency manipulation — and watch a stable and growing economy appear — one based on freedom rather than privilege, mutually beneficial exchange rather than exploitation. Once again the best course for government is: Get out of the way!

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Posted by John Ray (M.A.; Ph.D.). For a daily critique of Leftist activities, see DISSECTING LEFTISM. To keep up with attacks on free speech see TONGUE-TIED. Also, don't forget your daily roundup of pro-environment but anti-Greenie news and commentary at GREENIE WATCH . Email me here

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