Thursday, December 17, 2009

Work On Wednesdays - Job Creation, Who's Better At It?

I watched an interesting program on TV the other day where it discussed the topic, who is better at creating jobs....the federal government or the free market private sector? 

First, they looked at the priorities and motivations of each.  So we can call this the Business Approach versus the Government Approach to job creation.

This sounds like common sense to me.  If you are an entrepreneur who wants to start up your own business, what do you think your main desires, objectives and aspirations should be? 
1)  You should obviously want to make it profitable.  Who wants to have a business that isn't? 
2)  You want to have a business that fills a need and/or provides a service or product that's needed. 
3)  You will want to consider any and all competition you may have out there.
4)  In order to remain competitive, you will want to run your business as efficiently as possible.
5)  In order to obtain, and maintain those above mentioned objectives, you'll need to figure out how many jobs you will be able to create.  How many people will be needed to provide the service or product?

So the jobs you create are merely an end to a means.  You hire however many you need, and can afford to pay.  You have to factor in the cost of having those employees.  If you're looking at running a business efficiently and effectively, you're always looking at your (incoming) demand for your product/services, as opposed to your (outgoing) overhead costs, and your subsequent bottom line.  In other words, you don't create a business solely to provide jobs.  If things are going well, and demand for your products/services are up, then the more people you can afford to hire to keep up with that demand.  This all makes sense to me.

Now let's look at the government's approach.  Currently, they're not looking at it from a businessman's point of view.  They just know umemployment numbers are up and they want to help solve the problem.  So here's the impression many people are getting, as to what their priorities and objectives are....
1)  Job creation is at the top of the list.
2)  They want to influence and promote what they think is needed in the marketplace, such as "green" jobs.
3)  They figure if they spend more taxpayer money (where exactly it will go, we're not sure) by "stimulating" the economy, these jobs will materialize.
4)  Regulate and dictate to current business owners what the CEO pay should be and encourage union pay scale for their employees (many think that's to ensure more Democrats continue to get elected).
5)   Extend unemployment benefits, which is a great (incoming) monetary help for the unemployed, but it is only temporary and it's an (outgoing) expense for....
Well, where does that unemployment money actually come from?  You may think it's from the government.  Well, it is.  But how do they fill up their coffers?  It's the businesses and working people who are filling them up by paying taxes (outgoing) from their income. 

In the government's approach there are no clear cut objectives other than to try to somehow force the creation of jobs.  But you can't really "force" the creation of jobs.  The businesses in the private sector create the jobs.  The government currently seems to want to influence, direct and regulate the markets, which gives the appearance of wanting to ultimately control the businesses.  But by doing this, they are not taking into account how it will impact these businesses bottom line.  Unfortunately, this may be viewed by some, as those greedy businesses who care more about their bottom line than their employees.  But if the business cannot be viable, because of so many government demands and one wins. 

The government instead, needs to create a climate that makes it easier for businesses to prosper.  Don't make it more difficult for the job creators!.  I know the liberals and Democrats hate to hear this, but tax cuts actually do help create more jobs....and the more people that are working means the more money that is being paid into the government's coffers via taxes.  So everyone wins.  Isn't that the end goal?

Look back at those numbered priorities and objectives for both business and government.  Doesn't it appear to you that the business approaches versus the government approaches are reversed?  So who do you think has it backwards?  You make the call. 


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