Being how he is, he isn’t. Over the last eight years the current Administration has had the worst economic growth since statistics have been collected. Yet here at the end of his administration he is still talking about how robust the economy is. Only somebody delusional and living in the Washington bubble could believe that. The fat is that almost from the beginning the trend for small business was to “check out.”
You wouldn’t hear about any of this from Obama and other Dems. Frankly I think that far too many Democrats live in a bubble, protected by the fact that they seemingly can’t lose their all too important jobs in media, government and the such like to really understand what’s really going on.
Of course the Administration had such EXPERT advice.
The fact is that many, if not most people are just getting by and far too many are working multiple part time jobs to even have that. This is one of the key economic issues going forward.
The fact is that an economy that is essentially stalled might work fine for the elites who get to “manage the decline” but for most people it doesn’t work. For many of them the future is far too uncertain even if they have a job. It doesn’t tale much to look round and see jobs and work being shipped overseas.
There are consequences to a economy that encourages small businessmen to “go Galt.” IN a forum back in 2008 I once compared what Obama planned to do with taking a punt gun to the economy.
Between the twin regulatory disasters that were Dodd Frank and the ACA Obama’s punt gun did a big number on the economy, with a legacy measured in closed businesses and “For Lease” signs. Perhaps even a bigger impact is the many, many pages of trivial and burdensome regulations at all levels of government. They may seem not to have a huge impact individually, but compounded, the result is a mess and a general fear for a businessman that they may never be in compliance. This is amplified by cases like the Gibson Guitar raid with it’s associated costs.
For much of the nation’s history, this process of what Schumpeter called “creative destruction” has spread prosperity throughout the U.S. and the world. Over the past 30 years, however, with the exception of the mid-1980s and the 2002-05 period, this dynamism has been waning. There has been a steady decline in business formation while the rate of business deaths has been more or less constant. Business deaths outnumber births for the first time since measurement of these indicators began.
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Equally troubling, the latest analysis of Census Bureau data by the Economic Innovation Group points to the increasing concentration of new business formation in a smaller number of U.S. counties. The findings show that 20 counties account for half of new businesses and that most counties had fewer business establishments in 2014 than in 2010. Even accounting for so-called dynamic counties, the total number of firms in the U.S. remains lower than it was in 2004.
As the Economic Innovation Group shows, the 1990 recovery registered a net increase of over 420,000 business establishments, or a 6.7% increase. The numbers for the 2000 recovery were 400,000 and 5.6%. Since 2010, the number of new business establishments has grown by only 166,000 or 2.3%.
One explanation for this subpar new business formation is the overall pallid U.S. recovery. Today’s new-normal 2%-growth economy doesn’t inspire vigor or confidence. Likewise the collapse, until very recently, of real-estate values, and the imposition of tougher standards on personal credit cards, have constrained traditional sources of credit for startups. Banks have tightened lending criteria and many regional and community banks have disappeared.
Many studies have also attributed the slow rate of business formation to the regulatory fervor of the past decade. Some point to the deadening effect of the Dodd-Frank law, which is 23 times longer than the Glass-Steagall Act passed in response to the 1929 Depression. One part of Dodd-Frank, the so-called Volcker rule pertaining to bank investments, has 1,420 subsections. Then there is the Affordable Care Act.
It is not clear to what degree these laws affect business formation, but in a 2010 report for the Office of Advocacy of the U.S. Small Business Administration, researchers at Lafayette University found that the per employee cost of federal regulatory compliance was $10,585 for businesses with 19 or fewer employees, compared with $7,755 for companies of 500 employees or more. Large and established businesses navigate through rules and compliance requirements. Small and new businesses often find them prohibitive.
Don’t just blame the feds. State and local regulators have also hampered new business initiatives, notably through the growth of occupational licensing. In 1950, 5% of workers required a license or certificate. Today that number is close to 30%. Fortunetellers, party planners, florists, shampoo assistants, cosmetologists, manicurists, beekeepers, librarians and many others have joined the ranks of licensed workers. As the rate of private-sector unionization has fallen, occupational licensing has become a new barrier to entry into the workplace and a tool to protect incumbents from competition.
The current Administration’s legacy is written in those “For Lease” signs and the economic pessimism that has reigned supreme throughout the country for the last eight years. An economic pessimism that the Administration did not even seem to notice, let alone address. The Administration and to a certain extent Congress seemed content to add ever more taxes and regulations for people and businesses to comply with without ever considering just what they were doing. The quest for a perfect world was apparently more important than people doing well and prospering.
Meanwhile a bunch of ticking time bombs have been set off by result of the loss of the revenue that was not created by the businesses that were never started. The loss of income is going to have grave effects on the economy and it’s ability to support the bills that were kicked down the road by this Administration. By stomping on growth when growth should have been the only thing on anybody’s mind the crisis of 2008 will become the disaster of bills that cannot be paid, savings not saved and money no earned that could possibly cause not only the government, but the country to collapse. That will be the legacy of the Obama Administration.