Friday, November 14, 2008

Job Creation & Government

When the economy turns south, the people look for someone to blame. When a worker is laid off, they want to know what caused them to take back from the Unemployment Insurance (tax) they paid into through their employers. In such times as these we often blame the government but what is the government's role in job creation?

Congress does have the ability to influence the economy and governments do have a role in creating an environment that will create jobs. And in times like these, we see examples of not only the natural cycle of economies, but also how governments effect those cycles.

There are basically two things a government can do to spur an economy, as taught me by my Economics Professor: Spend More or Tax Less.

In September, the Nation saw unemployment rates hold steady at 6.1% while Tennessee saw rates jump to 7.2% and Alabama rates declined to 4.9% in August. Meanwhile Michigan is very different and experiencing harder times with an 8.7% unemployment rate.

“The downturn in the national economy is affecting all states,” said Commissioner Neeley. “Tennessee, like the rest of the nation, is experiencing job losses across all industries. There were some small gains in education and health services and local government education jobs.”

The business survey shows August-to-September gains in government employment, increasing by 10,700.

The Governor (Riley) also noted in his remarks that Alabama was one of only five states in the nation that saw its unemployment rate drop last month. The state’s August unemployment rate stood at 4.9 percent, while the national rate increased to 6.1 percent.

Tennessee and Alabama are not significantly different regionally nor in our workers, but there is a profound difference in the number of workers employed. The difference between our states is the manner in which our governments approach job creation. Governor Bob Riley has aggressively sought to attract business to his state and created an environment friendly to new businesses. Governor Bredesen has added more government workers.

Economies are driven by workers and consumers, and their perceptions and emotions. Investors attempt to predict the emotions of consumers on the Stock Market and create perceptions and emotions that drive the market.

But financial hardships are very real. We feel them as we pay our monthly bills. Investors feel them when they are on the wrong side of the mad herd called Wall Street. Politicians capitalize on those emotions and/or realities at the ballot box.

In Tennessee, we have great workers and thrifty consumers. Our people are not the problem. The problem is that our politicians have played on our emotions to legislate financial irresponsibility.

The Party told us we were "racists" for expecting banks to make good loans that could be repaid. The Party told us we were "uncaring" for expecting our neighbors to manage their finances and pay their own bills and only buy things they could afford. The Party told us we were "unpatriotic" to not want to pay more taxes. The Party told us that they would make our tax invisible to us by making the Corporations pay it before they passed on those costs to us.

The Party is wrong about us. Tennesseans are Generous, Responsible, and Hard-Working. We are Patriotic and Self-Reliant. When adversity hits our neighbors, we help, but when financially irresponsible politicians demand more money from our sweat, we tell them "No."

Why are Foreign Automakers moving their plants to Alabama and are Automakers successful in Tennessee while General Motors, Chrysler, and Ford seem to withering on the vine in Michigan? The Michigan government has created an environment hostile to business while the Alabama government has created one conducive to business. As a result, taxes are lower in the South, employment is higher and businesses continue to seek out places with good workers to employ.

I do hope that General Motors, Ford and Chrysler survive their hard times. I own or have owned products from each of them. But the outlook is dismal. They are being strangled by their inability to reduce costs. And I can not justify spending twice as much on a truck than my father paid for the house I grew up in.

Taxes effect us whether Congress hides them or not. We pay them either in higher costs at the cash register or decreased income from our employers. The answer in these trying economic times is not more taxes. The answer is not more government spending. We know best what to spend our hard earned money on.

And while it may seem fitting to stick "the corporations" with more taxes, it not only gets paid by workers and consumers, but reduces incentives for employers to open new factories and offices, reducing employment and hence paychecks. The Job Creation role of government must take into account the competition of other governments to attract employers.

And when our politicians tell us to add a Trillion dollars to our debt to bailout the economy, we must ask them whether we are bailing out CEO's and their multi-million dollar golden parachutes, or the workers. And when a politician votes for a CEO bailout as did the Representative of the 6th district, against Our Will, we have a right to an explanation as to why our hard earned money should be given to fat executives to spend on resorts. And when we find that explanation lacking, we have a right to change Our Representative to Congress.

If we continue along the path we are on, government will continue to grow. It is already the largest growth sector in our State economy. We do not wish to have a choice between a government job or a government handout, but that is the direction our politicians are taking us.

TNTaylor©2008, Tennessee Taylor, all rights reserved.

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