One of the biggest problems facing our economy today is the high rate of unemployment. The national unemployment rate is currently at 9.5%. Although the economy is showing some signs of improvement, most economists are predicting the unemployment rate will continue to climb and will exceed 10% later this year. It already is well over 10% in some areas of the country.
The unemployment rate was approximately 4.8% in early 2008 when Congress passed the long-forgotten $168 billion stimulus package while George W. Bush was still President of the United States. When Congress passed the more recent $787 billion stimulus package earlier this year, the unemployment rate was at 7.6%. At the time, our newly elected President, Barak Obama, predicted the unemployment rate would reach 9% by 2010 unless the new stimulus package was passed immediately. Congress passed the stimulus legislation and President Obama signed it into law with the promise it would save jobs. Regrettably, the unemployment rate now exceeds the level predicted by President Obama without the stimulus package. Taken together, the two stimulus packages total almost $1 trillion in additional federal spending. Instead of going down, the unemployment rate has almost doubled and is still climbing.
Many economists believe the economy has hit bottom and is beginning to improve. Although the worst may be behind us, many of these same economists are predicting a “jobless recovery”. As the term implies, a “jobless recovery” means the unemployment rate will remain very high despite an improvement in the overall economy.
It is obvious the high unemployment rate is a serious problem and will continue to be a drag on the entire economy. People who do not have jobs cannot afford to spend money. When people are not spending money, businesses cannot sell the things they make. As a result, they quit making the things they cannot sell, which means they need fewer employees, which in turn adds to the unemployment rate. It’s a vicious cycle.
As I see it, you cannot create new jobs without economic development. You cannot have economic development without investment. You cannot have investment without people with money to invest. Even if you have people with money to invest, you cannot have investment unless those people are willing to take the risks involved in making an investment. You cannot have people who are willing to take investment risks unless they know the rules of the game and have confidence the rules will not be changed in a way that is detrimental to their investment.
It is clear we desperately need new and creative government policies in order to encourage investment, which in turn will lead to economic development, which will ultimately result in job creation and reduced unemployment. I have the following ten ideas for policies designed to accomplish these goals:
(1) President Obama and the Congress need to develop and implement a new stimulus package. It is now clear the two previous stimulus packages were way too small. The unemployment rate has continued to go up despite the stimulus packages. The only obvious conclusion is that more federal spending is needed in order to reduce unemployment.
(2) The government should impose substantially higher taxes on the wealthiest Americans. Everyone knows the wealthiest people do not make the investments necessary for economic development and job creation. Poor and middle-class people are the ones who make these investments. The key to reduced unemployment, therefore, is to redistribute the wealth of the wealthiest Americans. Poor and middle-class people are much more likely to hire the unemployed. In addition, those who are unemployed will no longer have the indignity of seeking employment from someone who is wealthy.
(3) The government should increase taxes on investment income, including dividends and capital gains, while at the same time continuing to limit the ability of investors to reduce their tax liabilities in the event they incur investment losses. This will give patriotic Americans the incentive they need to take investment risks because they know they will be helping the government if they are successful and not hurting the government if they suffer a loss on their investment.
(4) The government should reform our health care system and pay for the reforms by requiring businesses to provide health care to their employees or to pay a penalty for not doing so. Increased financial burdens on businesses are a proven way to create more jobs.
(5) The government should save the environment by imposing a new tax on the carbon emissions for which businesses are responsible. Each business will have to hire many new employees to monitor its carbon emissions and to keep track of its increased costs for electricity, gasoline, and natural gas, thereby reducing unemployment.
(6) The government should raise the minimum wage. After all, the minimum wage has not been increased for the last two days. It was increased on Friday, July 24, from $6.55 to $7.25 an hour. In an editorial on the same day, The New York Times called for further increases in the minimum wage. I think this is a great idea. There is no doubt that increased employee wages will provide an incentive for employers to retain existing employees and hire new employees, further reducing unemployment.
(7) The government should impose massive new regulations on all types of businesses and should constantly be changing the rules to which businesses are subject. By doing so, the government will force businesses to hire new employees to help them comply with the new regulations and the constantly changing rules. Moreover, when they make their investments, investors love the challenge of guessing what future government policies might be. It’s almost as much fun as gambling in Los Vegas.
(8) The government should adopt rules making it easier for employees to form unions and to put pressure on their employers for increased wages and benefits. Most businesses love dealing with unions, and they will want to have as many union employees as possible. Investors also love the excitement of having a stake in companies that could be forced out of business because of union demands. It’s like a high-stakes poker game—great fun.
(9) The federal government should continue to spend more money than it collects in taxes every year, thereby increasing the size of the already staggering federal deficit. Businesses will need new employees to help them figure out how to pay their share of the federal debt.
(10) Finally, the government should ban all businesses from earning a profit and all investors from earning a return on their investment. Businesses will create many more new jobs if they no longer have to be concerned about earning a profit, and investors will be relieved of a lot of pressure if they are no longer concerned about earning a return on their investments.
In summary, it seems clear to me that the best way to reduce unemployment is for the government to increase taxes, impose new fees, regulations, and burdens on businesses, increase the cost of hiring new employees, and continue to incur huge budget deficits and expand the national debt.
If you like these ideas, I have a confession to make. These ideas are not original to me. They essentially reflect the policies currently being followed by the Obama Administration and the Congress of the United States. I have made fun of the logic behind some of the policies, but, for the most part, these are the policies being followed today. Do you think these policies are working? Is it any wonder that the nation’s unemployment rate continues to climb?
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