Economy not yet out of the woods

I’ve been waiting more than six years for the long promised recovery from the recession that began when George W. still was in office Way back in 2007 and 2008 we were promised the economy would heal with a new administration and working folks would prosper. It hasn’t happened.

Investment bankers prospered and people with high net worth prospered, but the working man has taken it on the chin. President Barack Obama and his administration have vilified those who were nimble enough to prosper during this time. What hasn’t happened is to have those in power stimulate the economy in such a way as to help create jobs. The policies of this administration have helped those on top of the economic heap, but not those on the bottom.

The U.S. labor force, when measured as a percentage of the total population able to work, has actually declined throughout this recession. A labor analyst quoted last week in The Alpena News said there was a decline in the unemployment rate due, in part, to the fact there was a population decline in the area. This is not an entirely bleak picture as those in the financial industry are doing much better than the population as a whole. At least somebody is benefiting.

The reason for the imbalance in this so called recovery is two-fold. First, there has been an increase of governmental agency actions which slow manufacturing and housing. Second, the recession never really has ended.

Government mandates and orders always impact business growth negatively. In my industry (utilities) it’s coal standards. In liquid energy it’s the lack of approval for pipeline development. For manufacturing it’s ever-changing labor standards. In the food service and tourism sector, it’s minimum wage uncertainty.

Government needs to establish long-term policies to encourage investment which, in turn, will cause job creation. The current administration doesn’t seem to like long-term stability but business loves it.

I believe we are headed into the second stage of an economic downturn based on global economics. The same thing happened in the 1930s. Following the 1929 stock market crash there had been a slight revival, then another full-fledged recession.

When President Obama came into office the BRICS (Brazil, Russia, India, China, and South Africa) were riding an economic crest. Today Brazil, Russia, and South Africa are in severe economic straits and India and China are operating at one-half their previous growth levels.

Supposedly responsible business publications are writing that Spain and Portugal are looking good when compared to Greece. I believe it’s safe to say that everyone who is not bankrupt looks better than a defaulting nation. Saying that Spain and Portugal have better economies than the “birthplace of democracy” is, in some circles, called being “damned by faint praise.” When we see in the United States that our GNP growth is equal to our inflation rate, that means there is no actual growth in our economy.

If the global economy falters, who is going to lead us out of it? The U.S. is depending on its low interest monetary policy to tread water. A stimulus would cause inflation and impact the GNP. Our monetary policy has helped the taxpayers in the upper tax brackets but didn’t diminish unemployment. It didn’t create jobs.

A change in the tax laws to favor investment would create jobs. It’s nearly criminal that we’ve ignored tax reform for almost a decade – the results of which have caused U.S. companies to move overseas. It’s bad enough to lose jobs to other countries due to tax policies at home, but it’s outrageous to not consider tax reformation when U.S. companies are forced to change nationalities.

This isn’t about placing blame but rather is about finding jobs for American workers. Savings equals investment so you pass laws and regulations to encourage more savings with less taxation. This will create the investment needed to create jobs and economic stability.

This is your homework assignment. Look up Arthur Laffer and the Laffer Curve. This curve postulates that if you raise tax rates too high, you actually get less tax paid. Conversely, if you lower taxes, more tax revenue will pour into the government.