We’ve all heard the statist meme that the “evil” corporations and banks are holding on to tons of cash, and are refusing to hire or extend credit. For those on the left, the solution is to tax them out of existence-all in the name of “justice.” Of course, that quest for “justice” will cause more jobs to be lost, more poverty, and all the problems that go with it. However, all of those negative consequences will be someone else’s fault.
On the right, we have a different explanation…
Atlas is Shrugging.
The man in the aisle seat is trying to tell me why he refuses to hire anybody. His business is successful, he says, as the 737 cruises smoothly eastward. Demand for his product is up. But he still won’t hire.
“Because I don’t know how much it will cost,” he explains. “How can I hire new workers today, when I don’t know how much they will cost me tomorrow?”
He’s referring not to wages, but to regulation: He has no way of telling what new rules will go into effect when. His business, although it covers several states, operates on low margins. He can’t afford to take the chance of losing what little profit there is to the next round of regulatory changes. And so he’s hiring nobody until he has some certainty about cost.
“I don’t understand why Washington does this to us,” he resumes. By “us,” he means people who run businesses of less- than-Fortune-500 size. He tells me that it doesn’t much matter which party is in office. Every change of power means a whole new set of rules to which he and those like him must respond. ‘‘I don’t understand,” he continues, “why Washington won’t just get out of our way and let us hire.”
There are a lot of responses I could offer at this point. But I am interested now; I prefer to let him talk.
It isn’t just hiring that is too unpredictable, he says. He feels the same way about investing. He has never liked stock markets; he prefers to put cash directly into businesses he likes in return for a small stake, acting, in short, as a small- time venture capitalist.
“Can’t do that now,” he says. For people like him — people who aren’t filthy rich — it has become too hard to pick winners. But he doesn’t blame the great information advantages enjoyed by insiders. He blames Washington, once more, for creating a climate of uncertainty.
Why Not Sell?
Growing bold — or maybe rude — I ask why, if the climate is so terrible, he doesn’t just sell his company. This brings a smile.
“I think about retirement a lot,” he says. “But I can’t.” I wait to hear about how much he loves the business he founded, or about his responsibilities to his employees, or perhaps to the town, somewhere in the Dakotas, where his factory is located. Instead, he tells me that it’s impossible to make a sensible decision about winding down his firm when he doesn’t even know from one year to the next what the capital gains rate is going to be.
So, I think this is a great description of how businessmen feel in the age of hope and change. People in small business, the ones that hire the most Americans, don’t know how the government is going to screw them next, so they aren’t exposing themselves to more risk by hiring. There are a ton of factors out there, and here are a few that I know.
1. What if they pass card check, and union organizers can intimidate and beat up people until they “sign the freaking card?”
2. How much will ObamaCare cost them? What if they’re not connected (or live in Nancy Pelosi’s district) enough to get a waiver?
3. Will taxes go up?
4. What about cap and trade, or other thinly-disguised efforts to tax plant food?
Any one of those would have a devastating effect on businesses. People in the administration have pushed ALL of them. So seriously, if you were a business owner, why would you hire anyone, especially if you have no idea what the government is going to do to you next? The economy is bad, people aren’t spending as much, the cost of fuel is rising, and on top of it, your own government is openly proposing policies that will put you out of business for good. None of these encourage anyone, other than statists bent on control.
As for the statists of both parties, they either have no idea how the real world works, or they do, and they are dead set on creating the mother of all economic crises in order to achieve, “fundamental change.” Either way you slice it, they will continue it until they are voted out of office. Let a man or woman get into the White House that knows business, and what owners need to add workers, and businesses will start hiring on day one.