How The Recovery Went Wrong

President Obama, in speech after speech, proudly makes the following point: Although we inherited the worst recession since the Great Depression, we have generated net new jobs every month, and while we need to do more, we are going in the right direction.

Of course, recoveries always go in the right direction—that is, things get better over time. But merely going in the right direction is an incredibly low performance standard. Moreover, since deep recessions are generally followed by more robust recoveries, this should have been one of the strongest recoveries ever.

So what went wrong? Harvey Golub - Wall Street Journal - Click To Read More...

Mr. Golub, a former chairman and CEO of American Express, is the chairman of Miller Buckfire and serves on the executive committee of the American Enterprise Institute.

Echoes of the Great Depression

During the great depression Roosevelt conducted a seven year attack on private business, denouncing businessmen as “economic royalists” and “malefactors of great wealth”.    His attack was successful.   Private business was paralyzed with uncertainty over taxes, labor policies, monetary policy and regulation.   Of course the country paid the price.   Ten years after the stock market crash industrial production and total employment were down 20 percent in the U.S., while the rest of the world recovered. 

What’s different this time?   FDR’s attack was so successful that people lost confidence in private business, and he was remembered for his presumably good intentions, rather than results.   This time we know better, thanks in no small part to alternative media.   In November hopefully things will change. - DSMW

The Forgotten Employer

There are plenty of arguments from the New York Times, Time and others on the political left why the American job picture is a disaster. The unemployment figures stretch from 16.5 to a dizzying 22%. Everyone has an opinion but no one actually speaks to the employer, the actual job creator.

What we find is this. For the employer the marginal tax rate is up 30% or more since Obama took office. Because of healthcare, additional security, business regulation the the cost of doing business has skyrocketed.  Every purchase of $600 needs a 1099, up from 4 1099s forms to over 100. The marginal tax increase has jumped in 2011 to 30%; that is 15% of the net on the marginal increase.  The government now takes over half of any marginal increase the employer makes.  Why take the risk?