Politics and markets

Geoff and I are long-time blog buddies. He’s got a great post up at Ace’s place about how President Obama doesn’t quite seem to get the whole “business” thingy.

The President finally realizes that he can’t make it without support by, and support for, American businesses. But does he really get it? I don’t think so:

…in his post-“shellacking” news conference Wednesday, Mr. Obama came close to conceding the chamber’s main argument, that American businesses have concluded — wrongly, in Mr. Obama’s view — that his policies are antibusiness.

“And so I’ve got to take responsibility in terms of making sure that I make clear to the business community as well as to the country that the most important thing we can do is to boost and encourage our business sector and make sure that they’re hiring,” Mr. Obama said.

Emphasis mine. You see, Mr. President, there are two things wrong with your statement. First, it’s not your business as to whether they’re hiring – they’ll hire when they need to. Don’t micromanage our businesses.

Second, “boosting” and “encouraging” the business sector is only indirectly related to hiring, because success in business doesn’t necessarily depend on number of bodies. Successful businesses are profitable, stable, and strategically positioned to prosper in coming years. If hiring supports those goals, then they hire, but if downsizing, outsourcing, or freezing hiring supports those goals, that’s what they do instead.

So telling business that you’re now going to support them so that they can start hiring is like telling someone you’re going to start a restaurant so people can poop more. It’s a likely consequence of feeding them, but it has nothing to do with why you’re running a restaurant.

That’s a pretty good start, Geoff, but you missed an important item. What we’re talking about here is government interference with the markets. In effect, even if President Obama were to try to urge companies to hire, or even if Geoff’s preferred course were pursued, it would still be a government skewing the market. The policies would inevitably be in favor of supporting existing companies. There would be no support or incentive for new innovative companies to either outperform legacy firms, or to establish new niches in the market. Those companies are the ones that would truly need to conduct new hiring. The creative destruction of the market is the engine of job creation. Propping up legacy firms, or encouraging rentseeking behavior does not.

We’ve railed before against government picking and choosing who wins and who loses in the market. It’s sad to see lessons still aren’t being learned.

1 thought on “Politics and markets”

  1. Post 1970’s era Democrats work with business? Why that’s crimethink in the Progressive era! You tired some of that California pot didn’t you Brad.

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