This Just In: Businesses Don’t Create Jobs

Posted on 2014 October 30

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Those who cannot remember the past are condemned to repeat it. — George Santayana

It’s a commonplace that many Right-wingers are closet racists, still clinging to outdated attitudes about people of color. Not so common is the notion that many on the Left are closet socialists, still clinging to disastrous models of economic development.

In 2012, running for a second term, President Barack Obama declared, “If you’ve got a business, you didn’t build that. Somebody else made that happen.” He was talking about roads and other infrastructure provided by public utilities, but it sure sounded like he was saying, “You didn’t build your own business — the government did!” *

This got Republicans’ panties all in a twist, and they hounded Obama about it. Well, it was an election year. And, in a way, businesses did “build that” bridge or road … with their tax dollars. U.S. business taxes are the third highest in the world, nearly 70 percent above the global average. 

Much as I support the Left’s efforts to legalize pot, gays and immigrants — and much as I, too, wish to get us out of the Middle East and exorcise Washington of fat cats — I find that Democrats’ beliefs about economics are painfully out of date. They often sneer with contempt at business leaders, as if CEOs merely sit in their skyscraper offices and do nothing but skim the wealth created by their worker slaves, then squirrel away those ill-gotten gains in piles of doubloons in their basements. This image might have applied to royalty during the late Middle Ages, but it hardly fits today’s owners, most of whom run small firms, work their butts off alongside their employees, invest their earnings by hiring more workers or purchasing stocks and bonds (which finance employment in other businesses), struggle with family and health problems like the rest of us, and put their pants on one leg at a time.

(True, some CEO billionaires live charmed lives, traveling amid security entourages on private jets, luxuriating in palatial estates, and hobnobbing with celebrities. Their idea of overtime involves expensive dinners with government officials, whom they bribe to confer special privileges on their corporations. But there’s a market-based cure for that.)

The Obama people tried to explain away the president’s verbal gaffe, and after a while the political storm subsided. Then along comes Hillary Clinton — also seeking to occupy the White House — and she declares, “Don’t let anybody tell you that it’s corporations and businesses that create jobs.” 

Say what?!?

If businesses don’t create jobs, then who does? The government? Tax money pays for government workers, plus private vendors who equip the military, build infrastructure, etc. But taxes reduce taxpayers’ disposable income, which lowers demand for other goods and services, which dampens job creation elsewhere. Add bureaucratic costs and one job created by taxes results in more than one job lost somewhere else. If Hillary meant government mandates like minimum-wage laws, these may actually tend to reduce employment, and they certainly don’t increase it.

It turns out Ms. Clinton was talking about the “trickle-down” theory, whereby tax breaks generate more profits, which create more jobs, which produces more profits … which often generate bigger tax revenues. Liberals hate this idea, even if it puts more money into government coffers. After all, businesses are essentially evil and must be shackled lest they run rampant, pillaging the people. If we were to lower taxes, why, businesses would do better! They’d make more money! They’d be rewarded, not punished! This is intolerable.

The Democratic party is attractive to many of good conscience who want to give the downtrodden a better chance. But it also appeals to people who simply earn less money — who work for The Man in stultifying jobs where they often take abuse from a company’s chain of command. No wonder so many Democrats dislike business leaders.

People on the Left in the U.S. can’t quite bring themselves to demand what they really want, which is to have the government rid us of tycoons and then run the corporations all by itself. But that’s socialism, which failed spectacularly in Communist countries.

Now, if I were on the Left, I’d grumble, “Yeah, well, the Soviet Union screwed up because they weren’t truly democratic.” They’re not remotely democratic now, yet their new market economy has (notwithstanding the Ukraine kerfuffle) grown by leaps and bounds. And what about “Communist” China, which also kept the dictatorship while switching to a market economy and promptly became a world player? Businesses sprouted everywhere; people streamed in from the countryside to work in the cities; prosperity blossomed.

“Well, the government created that!” Oh puh-leeeze! Sure, China and Russia still have state-owned conglomerates, but their vast, expanding economy derives mainly from freedom to own and operate private firms. Their citizens nowadays have the incentive to work hard and effectively because the bottom line dictates that they be proficient. It’s the basic principle of prosperity in a free-market system. Governments didn’t create that; they simply became wise enough to get out of people’s way.

Meanwhile, Democrats are also big on government oversight of the environment, believing businesses, left to themselves, would run roughshod over ecosystems. Conveniently forgotten is how Socialist Eastern Europe and the Soviet Union devastated their environments when everything there was under centralized command. Market economies, despite their failures, were always way ahead on pollution controls, forestry, and the like.

Both markets and ecosystems are complex and delicate, and when you manhandle them they go badly awry. Liberals wouldn’t dream of treating, say, a wilderness with anything but the most tender and hands-off care, understanding that such areas self-regulate and shouldn’t be messed with. Yet they get all one-dimensional when it comes to the economy. They think they can rearrange complex, evolving marketplaces without consequence, ushering in heavy government oversight, which ends up damaging the economic ecosystem. Instead of correcting their own policies, they simply condemn … business! That’s like blaming our introduction of invasive species on the native trees.

It’s always the fault of business! Government is innocent! No matter how badly things turn out, Progressives quickly forget all that unpleasant history and instead regroup to campaign for yet more of the same.

The Left, which basically fails to understand economics — or perhaps doesn’t want to understand it, lest it be tainted by business ideas — tolerates private enterprise but wishes it would go away. Failing that, it tries to shackle companies and put them into regulatory prisons, figuratively to let them out once a day to “do their business” and then return to their cages. 

Which brings us back to Hillary. To claim that she merely misspoke is like arguing that any number of conservative Republicans “misspeak” when they utter racist or sexist comments. It’s their true colors bleeding out, obvious dreck that we rightly condemn. But when Democratic anti-business prejudice leaks into the headlines, a great effort is made to gloss it over. Yet bias is bias, and where conservatives often have it against minorities, liberals have it against business.

From either side, it’s unfair. From either side, it’s poor reasoning. From either side, it’s simply false.

* * * *

* What the president said was: “Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that.”

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Posted in: Politics