Anything to avoid dealing with the gut problem in the U.S.: jobs or the economy.
Yes, the economy as measured by the stock market is doing well. Unemployment is also down somewhere around 6.3 percent. There is moderate job growth. But, fundamentally there are major problems. The housing recovery seems to have stalled. Investment funds bought up foreclosed houses and rented them out. That was a quick burst in activity that has stopped, and no one knows whether the rental movement with be a boon or a bust.
The labor participation rate is at 1978 levels: 62 percent dropped out of work force, decided to stay home, decided to hang it up, gave up looking for a job. The post-recession figure was over 66 percent. Simply put, we need more people working.
The Federal Reserve keeps pumping money into the system (although at a reduced rate), and some signs of inflation are starting to show. And, finally, because of delays to implementation of Obamacare, the full effects of the mandate that employers must provide health care for workers at 30 hours work, aren’t known. That and the mandate applying to 50 workers or more has stifled growth and indications are that there are more disruptions to come.
Let’s be clear: I don’t think the economy is going to fold up again. The trend is slowly upward, but it’s a fragile stairwell that could be shaken by internal and external events. Extending unemployment, expanding food stamps, loosening welfare requirements, and other subsidies, did provide a broader security net. But, building a broader security net not only is costly, it is not the way to grow the economy; as I mentioned last week, climbing on the energy boom in this country is.
It’s a once-in-a-lifetime opportunity. The administration’s knee-jerk attitude is to slow it, regulate it, control it, and subordinate it to alternative sources as well as block broader initiatives such as the Keystone Pipeline. Deciding to tackle climate change (prayer might be as effective) at this point, like all the other initiatives mentioned in the first paragraph, is crazy. Environmental control means direct taxes on fossil fuels and their users. That’s us. That’s the bottom line. It’s a negative. Cleaning the environment (not necessarily the same as fighting a warming trend, if there is one) can best be done when people are working and the society is innovative.
Speaking of that, business start-ups are at a low point and more businesses are failing than starting up. That’s not a good trend and indicates that there are barriers to business: for instance, taxes, regulations on production and personnel and performance. Try starting up a business without having a business lawyer, accountant, human resource consultant, and a local, state and federal regulations guide. I didn’t even mention the money which is now cheap but scarce and more of which is required. And, hiring people is often considered more of a liability than an asset.
Solve the job problem and you solve or have the resources to provide most of those aforementioned well-intentioned programs. Making those programs the focus of government is like putting weights on the legs of a swimmer.