We continue to stumble along wondering where the job creation is. Now economists “across the board” are predicting the Obama 2nd stimulus, otherwise known as the tax cut extension bill, will provide the boost the economy has been looking for. I guess that’s why I’m not an economist. I’m a little slow to catch on to these things, so bear with me. We’ve had these tax rates for seven to ten years already. Jobs aren’t being created. We’re raising the estate tax from zero where it was last year. This will create more jobs? We’re extending unemployment welfare. This will actually create jobs and not just provide survival money for the recipients?
The unemployment rate is 9.8% right now (yes, I know it’s actually much higher). We need to create somewhere between 100,000 to 150,000 jobs every single month just to keep up with the population expansion. Can anyone really say with any conviction that these are the bold steps needed to create the massive job growth we need to employ the 15 million people out of work? You may say there are some other sweeteners in the tax deal such as the child tax credit and incentives extended to help small businesses expand. Why haven’t they worked so far. Check out this piece from econjack that addresses what a business, any kind or size of business, must face when deciding whether or not to expand or even go into business at all.
Why There Are No Jobs In America
Newsletter | Nov. 18, 2010 | Porter Stansberry
Posted on Friday, December 17, 2010 2:13:41 PM by econjack
By Porter Stansberry November 18, 2010
I’d like to make you a business offer.
Seriously. This is a real offer. In fact, you really can’t turn me down, as you’ll come to understand in a moment…
Here’s the deal. You’re going to start a business or expand the one you’ve got now. It doesn’t really matter what you do or what you’re going to do. I’ll partner with you no matter what business you’re in – as long as it’s legal.
But I can’t give you any capital – you have to come up with that on your own. I won’t give you any labor – that’s definitely up to you. What I will do, however, is demand you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you’re allowed to operate your business. That’s my role in the affair: to tell you what to do.
Now in return for my rules, I’m going to take roughly half of whatever you make in the business each year. Half seems fair, doesn’t it? I think so. Of course, that’s half of your profits.
You’re also going to have to pay me about 12% of whatever you decide to pay your employees because you’ve got to cover my expenses for promulgating all of the rules about whom you can employ, when, where, and how. Come on, you’re my partner. It’s only “fair.”
Now… after you’ve put your hard-earned savings at risk to start this business, and after you’ve worked hard at it for a few decades (paying me my 50% or a bit more along the way each year), you might decide you’d like to cash out – to finally live the good life.
Whether or not this is “fair” – some people never can afford to retire – is a different argument. As your partner, I’m happy for you to sell whenever you’d like… because our agreement says, if you sell, you have to pay me an additional 20% of whatever the capitalized value of the business is at that time.
I know… I know… you put up all the original capital. You took all the risks. You put in all of the labor. That’s all true. But I’ve done my part, too. I’ve collected 50% of the profits each year. And I’ve always come up with more rules for you to follow each year. Therefore, I deserve another, final 20% slice of the business.
Oh… and one more thing…
Even after you’ve sold the business and paid all of my fees… I’d recommend buying lots of life insurance. You see, even after you’ve been retired for years, when you die, you’ll have to pay me 50% of whatever your estate is worth.
After all, I’ve got lots of partners and not all of them are as successful as you and your family. We don’t think it’s “fair” for your kids to have such a big advantage. But if you buy enough life insurance, you can finance this expense for your children.
All in all, if you’re a very successful entrepreneur… if you’re one of the rare, lucky, and hard-working people who can create a new company, employ lots of people, and satisfy the public… you’ll end up paying me more than 75% of your income over your life. Thanks so much.
I’m sure you’ll think my offer is reasonable and happily partner with me… but it doesn’t really matter how you feel about it because if you ever try to stiff me – or cheat me on any of my fees or rules – I’ll break down your door in the middle of the night, threaten you and your family with heavy, automatic weapons, and throw you in jail.
That’s how civil society is supposed to work, right? This is America , isn’t it?
That’s the offer America gives its entrepreneurs. And the idiots in Washington wonder why there are no new jobs…