I’ve had a toothache for the last couple of days, am on pain meds (a very great rarity for me), and am a bit out of it. I’ve got a dentist appointment later today and I expect the whole thing to be resolved one way or another in the next day or so.
While that’s the case I want to put a topic on the floor. What policies can be adopted that will spur hiring? My interpretation is that the position of the Obama Administration is to spur hiring by a combination of subsidies to encourage the specific businesses that receive the subsidies to hire and ordinary Keynesian pump-priming via what are broadly referred to as “infrastructure spending”. Whatever your ideological or philosophical position I think you’ve got to acknowledge that what’s been done to date has been inadequate. There are still at least 15 million people who are unemployed and underemployed plus the additional millions who’ve given up looking for jobs and, consequently, no longer are counted in the official reckonings.
If you think that the only problem with those policies is that not enough has been spent, I think there’s another question you’d need to address. Isn’t there some level of government spending that actually results in reduced total economic activity? That has, in fact, been the case in every fully planned economy like Soviet Russia or pre-1979 China. Government spending at one level or another accounts for about 40% of GDP right now. What’s the level of government spending at which it becomes counter-productive. Clearly, something between 0% and 100%. 40%? 60%?
The policies I’ve advocated here have been very much the opposite of what has been adopted by the Obama Administration. I think we need to encourage more business investment, more new business formation, and more hiring by removing the barriers and disincentives to them. Measures that might be adopted that I’ve suggested in the past include abolishing the payroll tax and corporate income taxes (and, presumably, FUTA as well). I’ve also suggested encouraging the states to produce a common set of regulatory requirements, analogous to the UCC, to reduce the overhead that businesses, particularly small businesses, face.
I also think that we need to encourage freer trade in a very hardnosed manner. I’ve suggested reciprocity under the assumption that countries that export to us are more dependent on us than we are on them. I’m not under any illusion that’s the case with all products and services so, clearly, no blanket policy is possible. I’ve also advocated abolishing our agricultural subsidies on economic efficiency grounds. I’ve also advocated immigration reform to emphasize economic efficiency which would really be a drastic change from present policy.
What else should we be doing? Or not doing?