Reading my recent posts, I’ve noticed a reoccurring theme, “The economy is under performing and the labor participation rate is low.” My frustration may have led me to the easy path of being critical. This week I would like to suggest why the economy is not growing and offer some solutions.
When making a major purchase, do you spend time evaluating the cost versus the benefits you will get from this purchase? Wash machines vary a great deal in costs. Would you spend the time looking at the options trying to eliminate those “must haves” from the “nice to have” features? This same thought process is used by people who own businesses. The business owner wants value for the dollars they spend, and if they are risking their money, they want a chance of a profit.
Right now a small business owner in California anticipates the following changes in their future. There will be an increase in the minimum wage, if a bill in the California Legislature passes; plus, there is the coming Obama Care insurance requirement; we already have work place rules which restrict flexibility within the work force, and very strict environmental requirements for any new business. If it were your money, would these costs concern you?
If hiring another person would increase your costs, with no guarantee of added profit, would you spend the money? If you knew it would take over a year, and incur significant costs to open another location, would you spend the money? Growing a business involves risk; would it be worth risking your money to keep half of what you might earn knowing you will absorb 100% of any loss?
We could jump start our economy by doing away with the minimum wage. The minimum wage was an idea created by well meaning people wanting to help the poor, when actually, the minimum wage hurts young people and the unskilled. The minimum wage assumes workers are too stupid to understand the value of their work. Investigate what happens to the young and unskilled workers when a minimum wage is introduced.
Reduce the Federal taxes on everybody to a flat rate of 12%. Business owners will invest more and start more businesses. People out of work will find more work available and will rejoin the job market. The young will find a path to employment. Billions in off shore profits will return home.
Immigration laws must be revamped and enforced. Why should people legally in the Country, paying taxes and social security, be displaced by someone willing to work for below market rates while not paying income taxes? When we overhaul our immigration system we can protect both immigrants and our current work force.
California and the Federal Government must join the new energy revolution. Fracking, when properly regulated, is not an environmental hazard. There is an economic boom taking place in those states which allow fracking and drilling for energy resources. California has one of the largest reserves in the world. Tapping this energy source will create jobs, increase tax revenues and reduce reliance on outside sources of energy.
Government contends they protect the poor and underrepresented. This is a myth allowing government bureaucrats to impact many aspects of commercial activity. The reason the middle class is shrinking has to do with young people not finding jobs due to obstacles created by an overly intrusive Government. Each person should consider themselves to be a Personal Corporation which accepts work at an acceptable premium while being totally committed to growth. Government Bureaucrats or Politicians are the last people who can help you be successful. Devote yourself to hard work, commitment, integrity and value to walk the path to success.
What is the important work of government? Protect our Constitution, our borders, handle disputes between the States, establish basic rules of commerce between the states, print a money with value and most important, get out of the way of citizens. It will be more fun to spy on us if more people are successful. Unemployed, poor people are stuck at home, working people have enough money to be out in public where drones have a better view of our activities.
If you would like to read about some other people who thought along these lines read up on Washington, Franklin, Jefferson, Adams and a document they implemented called the Constitution. These men understood the terror of a government grown too large.
