Job Creation - the Key To Protecting Entitlements

[WhoWee]

With an unemployment rate above 9% a $14.3Trillion national debt (with proposed cuts of $2Trillion) expected to grow another $7+Trillion, spending at approximately 25% of GDP, roughly 43% of all spending is on credit, and GDP growing at less than 2% - something must be done to encourage economic growth and thus job creation. This will surely be an issue in the 2012 Presidential election.

More jobs equals more tax revenue to the Government to pay it's obligations. I think everyone can agree on this point?

The debate over how to create jobs typically boils down to 2 arguments.
1.) Government funded jobs
2.) Private sector jobs

Government funded jobs require borrowing more (than the current 43% of spending) and increasing the national debt accordingly. The Government can create jobs 3 basic ways; a.) hire Government workers, b.) enter into contracts with private companies, or c.) finance projects. In the context of this debate, the Government spending is typically categorized as "stimulus".

Some of this "stimulus" spending is for a short term and specific amount - some of the spending will require an ongoing and increasing spending committment. A long term plan considered to be a "jobs creator" is the healthcare reform legislation often referred to as "Obamacare". This Bill expands the size and scope of Government and imposes additional regulatory control over the burgeoning health care and insurance industries.

Private sector job growth requires private investment - that is risk of capital. The motive for making an investment and taking a financial risk in the private sector - is profit (not discussing charities nor Government contractors). Part of any long term business plan is an understanding of tax and regulatory requirements. A major concern in the private sector is uncertainty about future tax rates - given the Government's need for additional revenue. Another uncertainty in the private sector is the continued expansion of Government regulations - we can explore those regulations in this thread.

The title of this thread indicates job creation is the key to protecting entitlement programs in the long term. IMO -the best way to meet the obligations to beneficiaries is to increase the number of taxpayers - spread the risk and not be dependent upon anyone group. Others may argue the "rich" people (earn more than $250,000 per year) can pay more - but they may be subject to business losses and eventually they retire as well.

Accordingly, I'd like to explore Government programs designed to create jobs and regulatory effects on job creation. I found a few links that touch on the subject to start the discussion.

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/09/AR2011020906493.html
http://blogs.abcnews.com/politicalpunch/2011/07/-278k-per-stimulus-job-white-house-says-no.html
http://www.dailyfinance.com/2010/02/01/obamas-2011-budget-targeted-stimulus-focused-on-jobs/

The last article touches on targeted tax credits to help business - this will undoubedtly be part of the discussion - some will argue there is proof that tax cuts don't work.

IMO - tax cuts are not the final solution as the full impact of tax cuts are neutralized by increased regulation.

 

[daveb]

The biggest issues as I see it with the regulatory process is that unless you work directly in the field being regulated, it's frequently difficult to adequately analyze whether or not those regulations are necessary for protection of the public. Politicians are not experts, and they have two competing groups telling htem what to do. On one hand, the businesses who would know (or at least employ people who know) the impact of having the regulations versus not having them; and the other hand, groups consisting of advocacy groups who likewise have their own experts.

Obviously, the business side would like to have as few regulations as possible since it affects the bottom line. To think they would do "the right thing" (whatever that might be) is naive at best. Unfortunately, many of the advocacy groups have their own agendas as well and distort the issues (frequently on purpose).

Take for example radiation and radioactive materials, which I would consider myself as an expert at some aspects and familiar enough with the remainder to make an informed judgement. Groups such as the Sierra Club and Greenpeace will rail against nuclear power and radioactive materials regardless of how much regulation there is - in essence, they would like to see them go out of business. On the other hand, some unscrupulous power companies would love nothing more than to see regulations relaxed. If nothing goes wrong, the companies would say, "See? No regulations were necessary!" But if something does go wrong, then the public screams outrage about why there wan't more regulation. As for the regulations themselves, while there are a few I would consider onerous, there are others that are absolutely necessary.

Add to this that for some regulatory agencies (the Minerals Management Service scandal comes to mind), the regulators are "in bed" (literally in that case) with those they were regulating, or that some government workers move back and forth between the regulatory jobs and lobbying jobs where they argue against those regulations.

What's the answer? I don't know if there is one.

 

[daveb]

To add, though, yes, job creation is the key to protecting entitlements.

 

[WhoWee]

Nuclear plants and other industries with life and death impact need to be regulated by the experts working in their respective fields - IMO.

The type of financial regulation that concerns me includes over-reaching measures like Sarbanes-Oxley and the new Dodd-Frank. The recent healthcare reform Bill had over 2,000 pages - and the specific details are still not clear to business leaders. Then we proposals like Cap and Trade - designed to combat "global warming" - that would certainly increase energy costs to consumers. On the topic of energy - we have near gridlock - don't we?

On one hand the Government has provided incentives for wind and solar - on the other, have you ever tried to pull a permit for a windmill?

 

[BobG]

Nuclear plants and other industries with life and death impact need to be regulated by the experts working in their respective fields - IMO.

The type of financial regulation that concerns me includes over-reaching measures like Sarbanes-Oxley and the new Dodd-Frank.

I think we absolutely needed something similar to Sarbanes-Oxley, even if the act is arguably overdone.

A corporation or two melting down due to scandal isn't that big a deal except to those that focused all, or most, of their investments into that particular company. The accounting firm scandals were far more damaging than Enron and Worldcom, since accounting firm scandals threatened confidence in the system, itself. There had to at least be regulations in place to ensure the objectivity of independent audits and security analysts.

Over-reaching, i.e. doing more than it actually needed to do? That's certainly possible, though.

 

[256bits]

It all depends upon what type of regulation to which you would be referring.

Some categories include:
1. Regulations that are for the health and safety of the public.
You're first link has a memorable quote:
QUOTE
In an interview, Robert Reich, who served as labor secretary in the Clinton administration, put it this way:

"Presumably, we could generate a lot of jobs by getting rid of all regulations and working for $2 an hour in dangerous and fetid working conditions in cities whose air could hardly be breathed and spewing out products that one in 10 consumers might die from."
UNQUOTE

2. Protectionist regulations
These regulations are put in place with the purpose to save jobs in a certain industry. This includes but is definitely not restricted to duties and tariffs on imported goods, the designation of only specific enterprises to carry out certain functions.

3. Professional and tradespeople regulations - only certain individuals who have the training and/or expertise can belong to particular societies and practice certain professions and trades. Examples include doctors, lawyers, engineers. Only a policeman can act as a policeman.

4. Union laws and regulations

5. Product regulations - for example, What can be classified as cheese? Why does Florida have restrictions regarding the import of citrous produce across its border? When does a motorized vehicle transform from a moped into a motorcycle?

6 ...

I have listed only 5 categories. As anyone can see, certain regulations are an attempt to give a society functionality and a direction that its citizens can follow. Would anyone argue that the above categories and their encompasing regulations do not entail a cost to any business or entrepreneur? And one could argue also that these types of regulations do stifle economic growth as they do have restrictions on entrepenurial entry.

I would assume you would be referring to regulations that serve no real purpose except those that end up as being just a paper-pushing exercise. You stated the Sarbanes-Oxley and the new Dodd-Frank, both of which I know nothing about but I can guess that they are about tax law no doubt.

 

[WhoWee]

I have listed only 5 categories. As anyone can see, certain regulations are an attempt to give a society functionality and a direction that its citizens can follow. Would anyone argue that the above categories and their encompasing regulations do not entail a cost to any business or entrepreneur? And one could argue also that these types of regulations do stifle economic growth as they do have restrictions on entrepenurial entry.

I would assume you would be referring to regulations that serve no real purpose except those that end up as being just a paper-pushing exercise. You stated the Sarbanes-Oxley and the new Dodd-Frank, both of which I know nothing about but I can guess that they are about tax law no doubt.

Paper-pushing and taxes go hand-in-hand with the expansion of Government - none of it productive.

The President promised to fight for jobs and higher wages in his speech after signing the debt deal. Before the President and Dem leaders try to push another "jobs" spending Bill through - I think a discussion of regulations that restrict business growth is appropriate. The "Green Jobs" that he talked about is a perfect example - as I posted previously, anyone that's tried to pull a permit for a wind project will attest to the difficulty to develop. If the President wants wind and solar - maybe he should pave the way for wind farms on federal lands (not over oil fields)?