“We repeatedly hear about taxes, regulations, and uncertainty standing in the way of job creation. However, the National Federation of Independent Business (“The Voice of Small Business”) surveys its members every month as to their “Single Biggest Problem.” Among the possible answers are both taxes and regulations, yet “Poor Sales” has, in fact, dominated for the past three years. Additionally, as we see in the chart, “Poor Sales” and the Unemployment Rate correlate very strongly, at about 0.87.
Given these facts, is it disputable that our problem is one of aggregate demand and that, if we could improve demand we could lower the unemployment rate notwithstanding the tax or regulatory environment?”
Is it disputable? Of course it is.
Saying that poor sales is the biggest problem facing small business is like saying that the biggest problem facing the economy is that it’s not doing very well. It has no content. It tells you nothing about an amorphous concept called “aggregate demand” and even if it did, it does not tell you how to increase aggregate demand.
Of course businesses are worried about current and future sales. The challenge is to improve prospects for sales and profitability. We’re not very good at that.
Does the government spending borrowed money increase the sales of the businesses who receive the money? Sure. Does it increase them permanently? No. That reduces the incentives to hire even when your sales increase. Does borrowing money reduce the sales of other businesses? Probably. Does the expansion of the firms that receive the money increase the prices of inputs that they demand and thereby crowd out other firms? Almost certainly. These are empirical questions that we don’t have good information about.
Finally, I would note that while the survey that Invictus cites does indeed list “Poor Sales” as the single most important problem (25% in the September survey (scroll down to “Single Most Important Problem), taxes are listed as the single most important problem by 18% and government regulations and red tape is listed by 19%. So the two combine to 37%. They also happen to be two factors that government can actually control.
BTW, while I believe that regulatory uncertainty, particularly in the health care sector ia discouraging hiring, I concede that any precise evidence on its importance is just speculation (mixed with some bias of course).
UPDATE: Krugman made a similar claim to Invictus’s a while back. My comments are here. I find it interesting how we all use data to confirm our biases. It’s too bad that facts don’t speak for themselves. We speak for them and in doing so, we color them using our own lenses.
Ross Kaminsky, writing at The American Spectator, uses his sound voice to argue against Uncle Sam’s retaliation against
China for allegedly keeping the value of the renminbi too low American consumers who dare take advantage of good deals made possible by Beijing’s policy of tying the value of the renminbi to that of the U.S. dollar.
The great Bastiat makes a strong case for the flat tax. (HT David Hart)
… is from pages 148-149 of H.L. Mencken’s A Mencken Chrestomathy – a book which, if I were stranded on a desert island and could have only one book with me, I would choose to be my lone piece of literary accompaniment:
After damning politicians up hill and down dale for many years, as rogues and vagabonds, frauds and scoundrels, I sometimes suspect that, like everyone else, I often expect too much of them. Though faith and confidence are surely more or less foreign to my nature, I not infrequently find myself looking to them to be able, diligent, candid and even honest. Plainly enough, that is too large a order, as anyone must realize who reflects upon the manner in which they reach public office. They seldom if ever get there by merit alone, at least in democratic states. Sometimes, to be sure, it happens, but only by a kind of miracle. They are chosen normally for quite different reasons, the chief of which is simply their power to impress and enchant the intellectually underprivileged. It is a talent like any other, and when it is exercised by a radio crooner, a movie actor or a bishop, it even takes on a certain austere and sorry respectability. But it is obviously not identical with a capacity for the intricate problems of statecraft.
Andrew Bolt – Monday, October 10, 11 (03:27 pm)
The “good week” that Julia Gillard allegedly had with her Potemkin “tax forum” and jobs forum hasn’t shifted the Essential Research poll results today, with Labor still on 45 to the Coalition’s 55.
Andrew Bolt – Monday, October 10, 11 (01:20 pm)
Just two days after my column on the loneliness of children who are different, I read Mad Men star Christina Hendricks make exactly the same point that I feared might sound a corny consolation, but which in her own life has proved true:
Hendricks has always trusted herself instead of the crowd, a habit that has worked out more happily for her as an adult than as a teenager. While she was a good student, she was also ‘’pretty unhappy’’.
Her unconventionality led to her being a goth kid. ‘’I dyed my hair about 42 different colours and kids can be pretty judgmental about people who are different. But instead of breaking down and conforming, I stood firm. That is also probably why I was unhappy.’’
‘’Standing firm’’ worked out better 15 years later when she saw the script for Mad Men and her agency - not expecting it to succeed - refused to let her take the part. She took it anyway. Her agency dropped her. She shrugged and found herself a new agency.
Andrew Bolt – Monday, October 10, 11 (11:14 am)
During my 15 years in New Zealand, I knew some who had reclaimed Maori identity because of newfound pride and others who rediscovered Maori ancestry, no matter how thin, to enhance career goals.
Depending on the prevailing political winds of the time, some may wish to make it a point to reclaim a tribal, caste or other historically discriminated-against identity as a matter of pride and principle.
(No comments for legal reasons.)
Andrew Bolt – Monday, October 10, 11 (11:07 am)
Dick Warburton has spent a lot of time and effort investigating the global warming debate, so it’s just a cheap smear to write him off as someone’s mouthpiece:
A FORMER Reserve Bank board member has been branded a “mouthpiece for Tony Abbott” after launching a last-ditch campaign against the government’s carbon tax.
Dick Warburton came under fire from union leaders as he called for this week’s vote on the carbon tax to be delayed until there is greater global consensus on climate action.
Mr Warburton, the executive director of the new lobby group Manufacturing Australia including companies such as Amcor, BlueScope Steel, Boral and CSR, said moving before the rest of the world would put jobs at risk.
“It seems quite wrong to be going ahead with this when the rest of the world are actually pulling out of carbon taxes and (emissions trading schemes),” Mr Warburton told ABC Radio.
“As long as there is going to be a tax of this nature on manufacturing, which is not comparable to any other countries in which manufacturing is carried out, that has to be a disadvantage.
“It is a disadvantage that gradually would lead to probable loss of jobs and plant closures.”
Andrew Bolt – Monday, October 10, 11 (09:08 am)
And there was our special panel on global warming and the carbon dioxide tax - asking three scientists to rate Julia Gillard’s four basic claims.
Andrew Bolt – Monday, October 10, 11 (08:30 am)
Daniel Wagner of Country Risk Solutions on the growing risk of catastrophe in Libya, which seems to have been handed to Islamists by Barack Obama and NATO:
Islamists appear to be gaining control—or have already gained control—of the emerging government in Libya. The new Tripoli Municipal Governing Council is led by a member of the Muslim Brotherhood—Abel al-Rajazk Abu Hajar. The country’s most influential politician—Ali Sallabi—is an Islamic scholar. And the country’s most powerful military leader—Abdel Hakim Belhaj—is the former leader of a group believed to be aligned with Al Qaeda. Belhaj is seeking to unseat the nominal prime minister of the interim government, Mahmoud Jibril, the U.S. trained economist who has criticized the Islamists. Is there any real reason to believe that the evolving government is likely to be either moderate or democratic? The ‘democratic’ forces within Libya have already appear to have been crushed.
The Muslim Brotherhood members of the interim government, who currently dominate the Governing Council, have declared their intention to impose fatwas, ban theater, prevent women from driving, and eliminate art that takes a human form. Article one of the ‘new’ Libya’s draft Constitution states: “Islam is the Religion of the State, and the principal source of legislation is Islamic Jurisprudence (Sharia).” In other words, the law of Islam is the intended law of the ‘new’ Libya.
I find myself wondering if the powers that be in Washington and Europe had any idea that this could be the result of their funding and support for the Libyan resistance movement.... So the same man the CIA arrested in 2004, placed into custody, sent to the Gaddafi government, and was tortured for 7 years because he was allegedly linked with Al Qaeda, is about to run the show in Libya—and I haven’t heard any objection to this from any government in the West.
The NATO intervention was justified by a UN Security Council resolution in March that spoke of saving civilian lives:
Authorizes Member States that have notified the Secretary-General, acting nationally or through regional organizations or arrangements, and acting in cooperation with the Secretary-General, to take all necessary measures, notwithstanding paragraph 9 of resolution 1970 (2011), to protect civilians and civilian populated areas under threat of attack in the Libyan Arab Jamahiriya...
But seven months later, the war prolonged by NATO continues to kill civilians:
Libyan transitional government forces attacked deposed leader Muammar Gaddafi’s security headquarters in the center of his hometown of Sirte, hoping that once the buildings had been captured the fight for the city would be won.
The protracted battle for Sirte, a showpiece Mediterranean coastal city largely loyal to Gaddafi, has led to concerns the many civilian casualties will breed long-term hostility that will make it very hard for the National Transitional Council (NTC) to unite the country once the fighting is over.
Meanwhile, in the new Egypt of the “Arab Spring”:
NINETEEN people, mostly Coptic Christians, have died in clashes between Copts and Egyptian security forces, sparking fears of renewed sectarian strife.
Andrew Bolt – Monday, October 10, 11 (08:10 am)
Academics Simon Butt and Tim Lindsey are surely right:
UNDERSTANDABLY, Australians are concerned about the 14-year-old Newcastle boy held in a Balinese jail after being caught with a few grams of marijuana… Despite this, it should not be assumed he will be treated cruelly or inappropriately, or face a long period in jail. He has not yet been charged (a process in Indonesia that involves formal naming as a suspect) but he will neither be jailed for 12 years nor treated as an adult, as some media reports have suggested…
In the meantime, Indonesian authorities are apparently allowing the boy’s parents to sleep in a room adjoining his cell in the Bali police station, which is segregated from adult prisoners. Clearly, he is not being treated as serious offender or an adult, nor is he being treated harshly or unfairly by Indonesian criminal justice standards.
But this may change if his case is treated by the Australian media as a crisis and creates bilateral tensions, as in the Corby case. Then the police, prosecutors and judges start to feel cornered and obliged to take a stand. That sort of pressure will not help this boy.
For his sake, Australians should give the Indonesian system a chance to operate before rushing to judgment.
The instant demonising of Indonesia each time an Australian is arrested reeks of xenophobia, and is bound to be counter-productive. I’m also concerned that Foreign Minister Kevin Rudd’s amping up of this issue - even sending our Ambassador to Indonesia over to Bali to deal with a consular matter - only makes things worse.
This becoming farcical, with Gillard now trying to trump Rudd:
The Prime Minster, Julia Gillard, has taken a personal interest in the plight of a 14-year-old NSW boy arrested on drug charges in Indonesia, speaking to him over the phone yesterday to offer reassurance.
Andrew Bolt – Monday, October 10, 11 (06:06 am)
This mass bleating at one of the protests against Wall Street “greed” illustrates perfectly the collectivist mindset that is the enemy of individualism and free thought.
Monty Python was there already:
(Thanks to reader Chris.)
Andrew Bolt – Monday, October 10, 11 (05:54 am)
Richard North, author of Scared to Death:
Rather overshadowed by events at the Conservative Party conference in Manchester last week was a line in George Osborne’s speech which could mark the start of a long overdue political transformation in Britain.
The Chancellor acknowledged that a decade of environmental laws had been piling unnecessary costs on households and companies, adding that Britain was not going to save the planet by putting ourselves out of business.
He was referring in particular to the Climate Change Act, famously passed by the House of Commons in October 2008 by 463 votes to three, even as the snow was falling outside. By the Government’s own estimate, it would cost £404?billion to implement – £760 per household every year for four decades.
The Act included a voluntary commitment to reduce Britain’s carbon dioxide emissions to 80?per cent of their 1990 level by 2050 – a target generally acknowledged to be achievable only by shutting down most of the economy – in an effort to demonstrate ‘global leadership’.
The lunacy of this commitment can be demonstrated by the fact that neither China nor the US – who together produce 40?per cent of global emissions compared with our two per cent – are committed to such draconian reductions.
The madness Osborne seems to want to wind back is the very thing the Gillard Government is inflicting on Australia:
The overall effect of the unproven and probably unworkable technology to effectively bury carbon dioxide underground would be to double the price of electricity and make us even more dependent on Russian and other imported energy…
Nevertheless, a mad and ruinously expensive scheme was launched on the European stage. Industries should pay for using fossil fuels, through a ‘tax’ paid on each ton of carbon dioxide produced… Tens of thousands have been pushed into fuel poverty. Firms that could not pass on their costs moved abroad. Huge tranches of the aluminium industry have disappeared, one major firm having moved to the Emirates in October 2009 – taking 300 workers from Anglesey who had to follow to keep their jobs.
(Thanks to reader John of Molong.)
Andrew Bolt – Monday, October 10, 11 (05:23 am)
Troy Bramston says what Bill Leak’s illustration at the link describes brilliantly:
LAST week, the Prime Minister, her challenger and some powerbrokers were quick to dismiss the so-called “chatter” inside Labor about who should lead the government to the next election.
Assessing the government’s performance, one backbencher called it “a train wreck”. They labelled Julia Gillard “a dismal failure” and said “not even Einstein could get us out of this mess”. That’s from a Gillard supporter.
.... much of the caucus admits that the Gillard experiment has failed. The government’s standing couldn’t be lower and it faces diabolical policy challenges that it appears unable to resolve. It is impossible to think of anything that can save Gillard or her government.
KEVIN Rudd’s supporters have told the Foreign Minister to cool his leadership ambitions and make Julia Gillard’s management and standing the issue, as the Prime Minister faces critical tests of her carbon tax and asylum-seeker plans in parliament this week.
After the Foreign Minister fanned leadership speculation with a series of media appearances on Friday, attacking Tony Abbott and former Labor powerbroker Graham Richardson, supporters have urged him not to give the appearance of destabilising Ms Gillard.
Mr Rudd’s supporters argue that the government’s poor polling and political challenges are of Ms Gillard’s making and this will force MPs to a “consensus” for change late this year or early next year.
And supporters close to Mr Rudd say there is no prospect of an early challenge and he is not a candidate for the leadership unless “push comes to shove”.
One of Rudd’s supporters is surely right:
The MP who is reportedly running the numbers for Mr Rudd, Alan Griffin, told the Victorian party conference on Saturday that Labor had to treat the Greens as the political enemy and ignore those who believed the minor party’s preferences are critical to the ALP’s survival.
Mr Griffin called on Labor to “take them on” over their policy platform and party ethos. He said the Greens’ preferences were overstated in their value to the ALP and that it was essential for Labor to highlight the differences between the two parties.
CRITICS of the Gillard government are depicting the Labor-Greens alliance as a threat to Australian business and mainstream values. The government, so the doctrine goes, is being dictated to by the Greens in an unstable minority government whose radical economic policies are scaring away investors and destroying business confidence.
Under scrutiny, the evidence actually points to Gillard Labor governing in the Hawke-Keating tradition.
Emerson in his rebuttal plays down the catastrophic cave-in to the Greens over the carbon dioxide tax - the most suicidal of Gillard’s decisions - and forgets to note several other concessions to the Greens, including a media inquiry and a $10 billion green fund.
Some Labor MPs opposed to Mr Rudd are being accused of deliberately “talking up” his renewed activity in a bid to shore up Ms Gillard’s position.
Others are being accused of putting him in the spotlight to improve the prospects of “safe pair of hands” alternatives such as Defence Minister Stephen Smith and Trade Minister Simon Crean.
Andrew Bolt – Monday, October 10, 11 (05:11 am)
Just pretending . . . Anne Summers in The Monthly:HE [Andrew Bolt] accused a number of prominent light-skinned Aborigines of opting for an identity “that has political and career clout”. He portrayed the matter as merely one of opportunism based on the the benefits associated with being “an official Aborigine”.Later in the same article:
SO is Andrew Bolt the opinionator a construct, the creation of a media-savvy brain that saw the opportunities offered by the internet and the absence of significant right-wing voices among the commentariat in the mid-1990s? A great many people think so.
“I was astonished he was the same man,” [Robert] Manne told me. “He obviously saw there was reputation and money to be made from being conservative. There were no examples of such people in Australia.”
(No comment for legal reasons.)