Sunday, October 04, 2009

Will small business "Going Galt" be Obama's downfall?

As I read about the unemployment numbers going up, now to 9.8%, I can't help but wonder if small businesses will be the catalyst that brings down this administration. The commenters to a blog post at Don Surber's Daily Mail blog seem to be on the right track in understanding why small businesses are not hiring:

Commenter Sean says:

Businesses aren’t hiring because no one knows what in the hell our economic system is going to look like 5 years, or even 5 months, from now.

Will “Cap and Trade” get implemented as the Democrats hope?

How much of an upheaval will “Healthcare Reform” end up being?

Is the administration and Congress done overhauling regulation of the Financial Industry?

No prudent investor is going to bet their money (i.e., invest in growth) when it is conceivable that the government is going to radically alter how 50% of this nation’s economy functions.


Commenter RJGatorEsq. responds to Sean:

Sean is absolutely correct. I am an employer. I know a lot of other small business owners. I, and they, are just about unanimous: “I need some help, but I am not going to hire until I see what Obama is planning to do to us.”


Another commenter responds:

Sean is spot-on, but misses the potential for union mischief with the passage of EFCA. How many entrepreneurs are going to pour their money and effort into starting or expanding companies when a handful of union thugs can show up, bully their way into organizing your firm and then you have to spend two years with an Obama Labor Dept. telling you how much you have to pay your employees?

And finally, another says:

Exactly. Add to that Obama and the Congressional Democrats treating capitalism and every successful business like criminal enterprises to be plundered and you have a manufactured crisis.


Many business owners I have talked with say they are scaling back and not hiring because of the uncertainty of this political climate. Even if the economy recovers, many small business owners will stay on the sidelines because it may be too expensive for them to do otherwise. It's a capital strike as described in Amity Shlaes' excellent book, The Forgotten Man.


For example, a man who owns a painting business recently told me that his workers comp costs just went up making each employee more expensive. He is unsure how much worse it will get in the future. The result to this uncertainty? Fewer workers will be hired. The current administration's hostility towards small business may be their downfall. And as small business provides most of new jobs in the US, it should be. For how long will the citizens of this country stand for roughly 10% or higher unemployment?

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90 Comments:

Blogger pdwalker said...

Who cares?

The chronically unemployed can continue to get their Freebies from the Democratic congress and house as long as they continue to vote democratic.

Good times for ALL!

8:49 AM, October 04, 2009  
Blogger Ern said...

The burden on small business has been getting bigger for decades, of course. I agree with everything posted above. I'd like to add something that was added by the far more business-friendly Bush administration. Small business is important for many reasons. One of them is that some small businesses turn into large businesses. One way to do that is to get outside funding, probably in the hopes of going public. Sarbanes-Oxley creates a serious disincentive to going public. Private companies, as I understand it, are not subject to the provisions of Sarbanes-Oxley. I have seen the minimum cost of complying with Sarbanes-Oxley at half a million dollars annually. That's a pretty serious piece of the income of a company with, say, $50 million in annual revenue and $10 million in operating income (essentially, income before taxes and extraordinary items), which would be quite a profitable company, and one that would be a good candidate to be taken public. Initial public offerings (IPOs) have decline from approximately three-hundred per year in the late 1990s to fewer than ten annually recently. That means that an important means of getting cash back from an investment (by either the founders or venture capital funds) is all but gone, which will mean that there will be a whole lot fewer companies started and a whole lot fewer of them able to obtain investments from venture funds or angel investors. The fear created by the current administration's extreme anti-business attitude and actions, both executed and attempted, makes it even worse.

10:22 AM, October 04, 2009  
Blogger BlogDog said...

Obama's policies are his downfall. Whatever small business does is a rear guard action against an increasingly anti-business statist government.

4:18 PM, October 04, 2009  
Blogger David said...

Small businesses need a national organization with power proportional to that of small business in the American economy.

4:19 PM, October 04, 2009  
Blogger Russ said...

As a physician, I am very worried about my finances. Healthcare "reform" and the tax increases coming has me very concerned. My family has pretty much quit buying anything but groceries. No new cars, no hiring out landscaping, not eating out. I am saving for what may come. I am sure there are a lot of people out there like me who are hunkering down. The economy will never recover with this much uncertainty out there. Small business, the heart of the economy, would be nuts to hire anyone right now. My business will be lucky to hang on to the employees we have.

4:23 PM, October 04, 2009  
Blogger tsmslf said...

The other issue for small business is the lack of crdit to augment working capital. Employees are often paid from working capital until the goods/services are delivered and payment is received. Reduce working capital means reducing operating expense which usually means fewer employees. It's easier, cheaper and more efficient to hire people through a staffing company.

4:29 PM, October 04, 2009  
Blogger Tether said...

"... no hiring out landscaping ..."

--------------------

Yes, I just fired two butlers this morning. Let them eat cake.

You may have to earn your money if things change.

4:35 PM, October 04, 2009  
Blogger AST said...

What puzzles me is how people like Paul Krugman can say with such assurance that the Stimulus Bill just wasn't big enough.

The left seem to believe that our economy is so huge and productive that no amount of taxation and regulation and wealth transfer schemes can make a dent in it. They have bought into the Marxist idea that capitalists are evil and deserve to be punished, but they don't seem to have a clue about where jobs will come from when they've run all the employers out of business.

Never mind! Just keeping borrowing and spending and we'll stimulate our way out of this! How oblivious can you get?

4:36 PM, October 04, 2009  
Blogger theBuckWheat said...

I am working on raising VC money for an IT-related startup that will employ several dozen workers. If there is the slightest hint that "card check" will pass, I will reconfigure my business to use non-US workers to the maximum extent possible. That should cut the number of US employees we hire by at least two thirds. Unionization of my business would ruin its ability to raise additional capital compared to my Pakistan-based competitors.

4:44 PM, October 04, 2009  
Blogger Holly said...

I'd just like to add that so far it seems that any newly created jobs are going to government entities, none of which at last count produced a dollar in revenue or profit.

4:46 PM, October 04, 2009  
Blogger timco said...

You must be stupid to work as hard as you must to succeed in this environment. The odds are against you.

Money I would use to start another company I am using to get an Instrument pilot's license and plan my next vacation to Belize to do some scuba diving. I am going to enjoy myself until the environment becomes much more pro-business. And, I will do it in a way to spend as little of my money as possible....

4:47 PM, October 04, 2009  
Blogger Dr.D said...

This is the result of placing our economy in the hands of people who are driven entirely by ideology with no comprehension whatsoever of economics. They imagine that there is a magic money tree that they will be able to harvest forever (with no labor required), so there is no harm in their eyes in destroying all the businesses in the country.

They see all business in terms of exploitation, either of people or of nature, both of which they see as inherently evil. Of course, business of necessity has always made use of labor and materials to produce goods and services, and we have not called this exploitation but rather employment.

In short, the Left lives in an imaginary world, a world with no concerns for making things really work. As long as Americans allow the Left to govern, things will only get worse. When Americans say "enough" and throw them out, then we can begin to restore the country, but it will be difficult.

4:53 PM, October 04, 2009  
Blogger Russ said...

Look at how many small business landscapers are in your community. I am not looking at it as I am rich and need a landscaper. My kids mow the lawn. I am talking about the tractor work that needs done. I am talking about the neighbor kids who pull weeds along my road. I am talking about things that I could easily do for myself but find it benefits both parties if I can hire it out. It is amazing to me how many people hire their housework out due to both parents working. Some friends who clean house for a living can't find work. And yes, I make a good living, but it took me twelve years after high school to get here. That deserves punishment and derision?

4:56 PM, October 04, 2009  
Blogger UGASkiDawg said...

Well to answer your question...if unemployment is still near 10% in 2012 it will be a landslide victory for the Republican candidate.

4:59 PM, October 04, 2009  
Blogger SjB said...

Thank you for posting this. I have tried to get people to understand that businesses will not hire until they know what the government is going to do with health care, cap-n-trade, and etc. for the last 4 months.

It's not a hard concept. Businesses have to calculate costs and risks, but who can even begin to make short and long term projections in this environment?

I don't think people are listening because it's not being addressed on in MSM or the alternatives medias. If we could get this topic discussed on a national level, it could turn the tide against the liberal agenda and their accusations blaming business for the employment woes. It needs to fall squarely on the President's neck that he is destroying the private sector - the only sector where jobs are being saved or created is in the government sector.

Again, thank you for bringing up this subject and thanks to Instapundit for linking to you. I hope more and more people will become aware of this man-man (Obama) disaster.

5:02 PM, October 04, 2009  
Blogger ChocolateGodzilla said...

Fuck you Tether. The reasons thinking people everywhere hire out landscaping are many. Consider my time is worth 200 bucks an hour, and I am on call 24/7, the time I am free is not spent mowing the fucking lawn.

And have you priced mowers, edgers, etc recently? Doesn't make any sense at all for me to invest in that shit.

You are a true Progessive , though. Small minded and envious of people who work and make some dough. Piss off.

5:04 PM, October 04, 2009  
Blogger kylben said...

Have you even read "Atlas Shrugged" Helen? Save the "going Galt" for things that deserve the title, like when business owners start moving their businesses off the books, or quitting altogether to work as a counter-wiper at McDonalds.

5:12 PM, October 04, 2009  
Blogger Buddy Larsen said...

tether, who is going to feed the out-of-work landscaper's children? You?

5:13 PM, October 04, 2009  
Blogger Andy Johnson said...

I started hearing about the coming of Obama in 2007 from high net individuals. They were concerned about his taxes and the hits that business would take. several acquisitions died in the last quarter of 2007 for us. Funding dried up as people moved cash to safer places and less risky investments.

The rise in gasoline prices, the FASB mark-to-market rules and Wall Street panic all dried up credit and commercial sources by Oct 2008. In 2009, we closed our small platform company in March when we were unable to refinance and replace equipment.

I am sitting on the outide for the first time in over 35 years. I have created thousands of jobs and opportunity. I have made money and lost it. Right now I don't se an environment that would allow an entrepreneur to raise capital and start a new company or buy and expand an existing one.

The combination of Tax&Trade + Health Care + Personal + Corporate + Unionization + lack of capital from banks, commercial lenders, VCs, PE groups or Angels is stalling everything. The Banks are under pressure to lend and at same time hold high reserves and only do business with the most creditworthy. Every application in any amount is examined more rigorously than in 2005...

This recession will not be over until the ability to quantify risk and make investments with a degree of reasonable expectations returns.

70% of the economy was service ndustry. 75% of all payrolls were service industry. Until the consumer returns nothing happens... we are not a manufacturing nation... we are a service and information based society now.

I have "Gone Galt" and expect to be out of the game for three to five years... Maybe longer...

5:14 PM, October 04, 2009  
Blogger Helen said...

kylben,

This is only the beginning--the warning signs are there that business owners may do just as you say. Whenever the government starts becoming too far-reaching, as the current administration is doing, it is only human nature to bail out. Slaves always try to do as little as they can get by with.

5:20 PM, October 04, 2009  
Blogger Buddy Larsen said...

And after you've put the physician to work digging ditches, who is going to treat your mental illness? What are you going to do when the food runs out? Kill off the excess people?

Jeez --Pol Pots everywhere these days. Thank God for the Second Amendment!

5:20 PM, October 04, 2009  
Blogger br549 said...

I work for a small manufacturer of a niche product. Every distributor and customer we have is many times our size. 10 days 1%, net 30 are long gone. We are lucky to get paid between 60 to 90 days. Some extend to beyond 120 days. As one can imagine, that causes big cash flow problems. Providers of raw materials are being paid late as well. This increases our costs, as we no longer get better deals. Growth is out of the question. Just keeping the doors open with what we have is an incredible struggle.

Russ, it is easier to stay in mommy and daddy's basement and bitch, then to take the initiative to start a landscaping business and compete for some of the money you are willing to pay out for a manicured lawn and garden.

5:28 PM, October 04, 2009  
Blogger Dusty said...

Tether @ 4:35 PM, October 04, 2009

He said landscaper, not butler. How do you know how much this physician makes? The point is that even the professionals, of which the physicians are in the mid to top rung of the middle class, are eliminating all but the essentials.

That's in contrast to my middle-working class neighborhood about 10 homeowners used to employ landscapers (primarily to mow lawns) and now there's only one.

You realize that mowing your own lawn doesn't produce a cent more in income taxes, don't you? You do realize the reduction in landscape business increases unemployment insurance payouts, not to mention eventual increases in food stamps, welfare, and medicaid. Equipment isn't bought, business insurance isn't bought, accountants aren't consulted ....

This isn't about the physician. It's about the economy, so quit with your socialistic "Nobody should live that good" tripe.

5:34 PM, October 04, 2009  
Blogger John said...

I love it when people who have no idea how long we train in medical school, residency, and fellowship/subspecialty training give me crap about hiring someone else to handle certain household chores that I am too tired to do after 100+ hour work weeks in a neonatal intensive care unit.

Of course, if national socialist obamacare is forced upon us, then I just may take up landscaping and quit the medical field. Less paperwork, less hassles, and I can insist on being paid in cash at the time of service, rather than waiting for some worthless government bureaucrat to deny payment for 2-3 years before begrudgingly paying my 50% of the fair market value for my services.

And I'd have a much better tan from working outside....

5:34 PM, October 04, 2009  
Blogger br549 said...

By the way, Russ, if not for people like you, and the medical miracles our system has allowed, I would be dead. I am hoping you do not have to walk away from your profession because of Obamacare.

5:39 PM, October 04, 2009  
Blogger Joan of Argghh! said...

Maybe we can look forward to a robust black-market economy like Russia has (and which has been successfully exported to my little town).

5:39 PM, October 04, 2009  
Blogger William & Susanne Waites said...

When we are all wards of the state, who will employed to pay the taxes for our entitlements?

The over-paid union bosses?

No one has an obligation to work any harder than the least productive of us if fruits of that work go to support people who are not working hard. What's the point?

That's what the Leftists, who don't work at much beyond currency manipulation and exploiting the weak-minded, don't get. We can't all ride in the wagon, if no one is rewarded for pulling it.

Silence now while I pull out my hair.

5:41 PM, October 04, 2009  
Blogger Tether said...

"It's about the economy, so quit with your socialistic "Nobody should live that good" tripe."

----------

I don't really want to belabor this - and it's kind of off-topic - but it sounds like he's some middle-class guy, and I'm sure he's got a few kids and a bitchy, lazy wife. Mortgage, dog, mini-van or SUV. Great. Super-Duper. The neighbor just got a bigger car, though, so that's a worry. Decades and decades of the same suburban monotony.

I sometimes feel like taking a spontaneous poke at self-important twits. That's all.

5:56 PM, October 04, 2009  
Blogger Dr.D said...

William & Suzanne said, "We can't all ride in the wagon, if no one is rewarded for pulling it."

Don't you understand that for this wagon, it is going to be all downhill?

5:58 PM, October 04, 2009  
Blogger keebs said...

It's the class warfare stupid...and Tether encourages it "Profit" has become a bad word. Way to go, idiot. You and the rest of the nuts on the socialist left have made a real mess of things. If the people who know how to work for a living Go Galt, and the economy stays in the toilet, you have no one to blame but yourself. What a dumb sh**.

5:59 PM, October 04, 2009  
Blogger Tether said...

This comment has been removed by the author.

6:01 PM, October 04, 2009  
Blogger Tether said...

I'm not on the socialist left, keebs.

I'm on the make-fun-of-self-important-twits, kind-of-on-the-right-or-libertarian side.

This board just has a surplus of very important people, so it's keeping me busier than usual.

6:01 PM, October 04, 2009  
Blogger AJ Lynch said...

Obama's economic plans have done little to restore confidence to consumers, business owners and potential job-creators. That is a huge impediment to an economic recovery.

Just yesterday, Obama's Saturday fireside chat promised business owners that his health reform plan will save them money! Obama is clueless when it comes to the economy. He is destroying what little was left of it when he took office. And yes, I have gone Galt in some ways.

6:03 PM, October 04, 2009  
Blogger keebs said...

LIBERTARIAN? Give me a break. The doc is talking about how he has had to adjust his lifestyle (a lifestyle that pumps money into his community) because of the downturn in the economy. I didn't get "self-important" from his post at ALL. So much for live and let live.

Sheesh.

6:04 PM, October 04, 2009  
Blogger Tether said...

Kylben sez: "Have you even read "Atlas Shrugged" Helen?"

-------------------

That kind of occurred to me as well. I think she just likes that flip phrase, but she doesn't seem to have an incredibly deep understanding of the book.

6:05 PM, October 04, 2009  
Blogger Tether said...

Well, keebs, I also come out of my parent's basement once in a while to buy potato chips, Hostess Sno-Balls and Mountain Dew.

That contributes to the economy too.

6:06 PM, October 04, 2009  
Blogger Bret said...

I have to agree with Kylben and Tether. I'm a business owner and I'm not hiring either, but that's because not hiring is what optimizes my position given the current environment of uncertainty and my subjective willingness to absorb risk. It has nothing to do with Galt's "principles" of "I swear by my life and my love of it that I will never live for the sake of another man...".

Again, the difference is Galt (or at least his followers) purposely impoverished themselves in order to live by their principles. How many business owners are really doing that? I guess not many.

6:11 PM, October 04, 2009  
Blogger keebs said...

It's all the same...Hostess snow balls, landscapers, new cars.

But, if your parents (or the government) are footing the bill, I guess you can be cavalier about where the money is coming from.

6:12 PM, October 04, 2009  
Blogger Tether said...

"But, if your parents (or the government) are footing the bill, ..."

----

Yup, either my parents or my law practice. One of the two. I forget myself sometimes.

6:13 PM, October 04, 2009  
Blogger keebs said...

Hmmm. Are you hiring?

6:15 PM, October 04, 2009  
Blogger Bigwig said...

"Self-important-twits"

Pot. Kettle. Black.

6:16 PM, October 04, 2009  
Blogger Bill said...

Small business owners may have (in the past) hired two or three to do his job, and decided to bow out slowly while things looked okay. While he was semi-retird, he vacationed and then in 2008 watched his/her portfolio (that came from years of hard work) tank in six months. Now, he's going back to work, cutting a job by doing it himself, and all of the vacation money is going into hunkering down.

6:30 PM, October 04, 2009  
Blogger MattJ said...

Doctors arguing for the free market applying to the demand for their services would be a lot more convincing if they were in favor of the free market controlling the supply of their competitors.

6:30 PM, October 04, 2009  
Blogger Buddy Larsen said...

...so Tether, hope you specialize in some form of charitable legal aid volunteerism cuz otherwise you'd be sort of a hypocrite to insult the aspirations of professionals --who after all are rewarded (or not) on the basis of merit.

6:42 PM, October 04, 2009  
Blogger keebs said...

"...would be a lot more convincing if they were in favor of the free market controlling the supply of their competitors."

What do you mean?

6:42 PM, October 04, 2009  
Blogger rhhardin said...

The ditch digger with power equipment earns more than the ditch digger with a shovel.

The difference is how much capital behind the job.

Capital is extra money.

The rich have extra money to invest, if there's hope for a return on it.

6:48 PM, October 04, 2009  
Blogger William & Susanne Waites said...

Is there any profession more self-important, less productive and more protected than the legal profession?

They create nothing but problems only they can solve. What a racket!

6:55 PM, October 04, 2009  
Blogger William & Susanne Waites said...

This comment has been removed by the author.

6:56 PM, October 04, 2009  
Blogger John said...

Matt,

It is the 50 separate state medical licensing boards that limits the supply of available doctors...not to mention the arduous 4 years of medical school and the 3-8 years of residency/subspecilaty training that come after medical school.

By the way - those state medical licensing boards are controlled by politicians and bureaucrats, not physicians.

So perhaps you'd care to clarify your comment?

7:11 PM, October 04, 2009  
Blogger Foobarista said...

My wife is a "business broker", which is like a real-estate agent for small businesses. She has tons of business listings, but very few sales. The only popular businesses are small family-run businesses with lots of cash income such as bars and donut shops. She sold a big bar this year - without that sale, she'd be having an awful year.

7:25 PM, October 04, 2009  
Blogger Mike K said...

There is a web site called Sermo that is for physicians only. It is a sort of on-line competitor for the AMA. Recently, they had a thread on physicians dropping Medicare and even private insurance and practicing for cash. There were over one thousand posts and about one third are from physicians who have already started, or are considering, shifting to a cash only practice. This is a real phenomenon and you will realize it only when you try to get a primary doc for your Medicare. They are disappearing quietly from the rolls.

7:40 PM, October 04, 2009  
Blogger Plump Pleasant Plumber said...

What is starting to really get going is the underground economy. What folks are trying to do is survive, not expand their business. In the service industries like lawncare, home repairs, electricians, plumbers, painters, remodelers-Competition from Mexican contractors who aren't paying ANY taxes is severe. We can't afford to go Galt completely, as the Mexican contractors would just swallow up what work there is. There's enough work to survive on, but at half what was charged before. So, what happens? Gov policy of illegal immigration has created a situation where homeowners are always looking for a cash bargain with cheap contractors. It's developing into a 3rd world situation, and Obama expects folks to pay taxes in this type of situation? Higher taxes at that? When folks lose good paying jobs and have to work part-time just to put food on the table? The affluent investor can't invest in a highly fluid situation that is turning socialistic. Friends of mine from Europe explain that the socialist governments do charge really high taxes, but most folks keep 2 sets of books, and have at it in the underground economy. Doesn't bother them at all. So, that's what's happening here, and a lot of folks have to live that way.

7:56 PM, October 04, 2009  
Blogger Skipper50 said...

This is precisely what prolonged the Great Depression. Business was stymied by the onslaught of regulations, taxes, this and that, not knowing what the rules were or what the future held. So everybody just hunkered down.

8:21 PM, October 04, 2009  
Blogger kylben said...

@Helen: "This is only the beginning--the warning signs are there that business owners may do just as you say."

Well, some already are, and more will. When you talk about that trend rising, then you'll be talking about something in the ballpark of "going galt". This, you're just rendering the phrase meaningless.

8:24 PM, October 04, 2009  
Blogger Darren Duvall said...

Back to your final question Dr. Helen, a 10% unemployment figure is pretty de rigeur for our friends in Europe, and yet they evidence nothing approaching the angst we have with that number.

I think BHO would be okay with that number if he felt we had a European-class social safety net, because hey, the Germans do it and they're just fine, right? The problem is a chicken-egg issue, we have the unemployment without the net and at this point there is no appetite for weaving the net on the backs of the people who have jobs (for who knows how long, they rightly say). When things get good, we don't feel we need the safety net.

The unemployment hit before the safety net was even on the table, and the bolt of the Stimulus was shot (errantly, it appears), leaving us without even the possibility of a Rooseveltian "Economic Bill of Rights". If things were clocking along like they were in 2006 there might have been some possibility for creating a Euro-style benefits program, but I doubt even then there would have been any real interest in it. We are Americans, we work. It's what we do. A growth economy and insurance through work is how we play the game, and I believe that is how it should be.

The issue with Mr. Obama's policies as steps toward a social safety net is that they seem destined to perpetuate a stagnant economy and make permanent this high level of unemployment. Cap & Trade is one particular sausage that has been so massaged that it doesn't even perform its original goal of feeding money back to the federal treasury for redistribution. The Podesta/Soros VAT has about 14 months to get passed before the GOP storms back into the House and monkeywrenches as much of this silliness as it can, one hopes that fiscal conservatives will lead the march back to Washington and attempt to set things right(er) with some serious budget cuts and elimination of red tape that would get small business moving again.

8:28 PM, October 04, 2009  
Blogger Plump Pleasant Plumber said...

Folks don't trust Obama to do what is good for the country. Without that trust, hunkering down is the only sane thing to do. ACORN has caused what I believe is a permanent breach of trust between Obama and the White centrists that helped elect him. Corruption errodes trust, and as more ethical and moral breeches occur, Obama will be deserted, high and dry, as our economy suffers thru his malfeasance. So, who in their right mind would want to stick their neck out and hire folks with Obama in office? Capital flight, indeed...

8:37 PM, October 04, 2009  
Blogger SC Mike said...

You can joke about “not hiring out landscaping,” but my wife and I will turn 60 next year, we both have arthritis, and both work full-time, long hours. Last year my wife made a deal with a landscaper for two-hours by a crew of three every two weeks to do what they can, meaning mow the grass, trim the hedges, rake the leaves and pine straw on our 1/3 acre estate. They get it done quite nicely and a bit better than we could, and it runs $130-195 per month. We’d rather not spend that money, but the alternative is to let the place run down a bit more. The 50-year old place needs a paint job, but adding the new roof last December (a white one, or grayish white, because the albedo matters, especially here in SC) put the kibosh on the paint job for a year, especially considering the new furnace and HVAC two years ago, and the windows are shot but maybe by the Rio Olympics we can fix that…

I work for a large, publicly held company and SarbOx is expensive, in part because it’s so ill-defined: who really knows what violates it. That law is why New York is really screwed: pubic offerings have moved offshore to avoid it.

8:47 PM, October 04, 2009  
Blogger Swen said...

About this time in threads like this someone usually asks just what we think Obama would be doing different if he actually hated this country and wanted to see it destroyed. Is it time to ask that question yet?

9:13 PM, October 04, 2009  
Blogger Jeff Y. said...

These comments about small business are startling.

I just have one question. If Obama actually hated the country, what would he be doing differently?

9:44 PM, October 04, 2009  
Blogger Dr.D said...

@ Jeff Y

Obama would be doing exactly what he is doing now.

9:53 PM, October 04, 2009  
Blogger Michael Lee said...

This comment has been removed by the author.

10:03 PM, October 04, 2009  
Blogger Michael Lee said...

This comment has been removed by the author.

10:03 PM, October 04, 2009  
Blogger Michael Lee said...

@ERN: Regarding SOX (Sarbanes-Oxley) and similar regulations (HIPAA for medicine, for example), the economic costs are not incalculable--they're huge. ERN makes a great point.

The rule of law is being replaced in this country with the moodiness of regulators. It's hard to determine what the law is and everyone is going ridiculously defensive. There is no rule of law when the common man cannot tell what the law is.

More than freedom, the rule of law is essential to economic propserity because, as has been pointed out, the future is uncertain and you have to give people a decent level of predictability or they'll just huddle down and say, Eff that!

Obama and his masters have zero understanding of this. They could third world us with their naive trust in their own moral superiority as a substitute for rules of the road.

10:09 PM, October 04, 2009  
Blogger Plump Pleasant Plumber said...

The long term effects of Democratic policies are going to last long after we have gotten rid of them. Voluntary tax compliance is going to go way down, and may never recover. Folks who have been severely affected by these socialist policies will never pay all their taxes again. They will do what happens in Europe, and cheating on taxes will become much more commonplace. What has set us aside from Europe has been our voluntary tax compliance. People will manage their affairs to avoid unfair taxes, and this attitude will persist long after Obama. Obama lies about taxes, and who does he think he is talking to?

10:12 PM, October 04, 2009  
Blogger Xiaoding said...

Philip Bobbitt saw all this coming years ago, in his book "The Shield of Achilles".

I am amazed at the sheer stupidity of Obama. Surely he has read this book, or at least discussed the issues.

The point is, people no longer trust the government-at all. It's not that they don't trust Dems or Pubs, they don't trust the government to deliver services efficiently. Too much corruption, which is all too visible in the internet age.

Governments role is now to enable private enterprise to perform necessary services, not provide those services itself.

Obama is arguing against the tide of history. Health car is fine, but government provided health care is an impossibility.

It's the same for the Democratic party, deaf to change, deaf to the new world. Time for at least two new parties., or a violent overthrow. The failure to recognize reality precedes violence, in the political world.

12:12 AM, October 05, 2009  
Blogger Buddy Larsen said...

Michael Lee says "The rule of law is being replaced in this country with the moodiness of regulators."

--amen --you have to make these inspectors LIKE you somehow, because the rulebook from the agency is gonna be a single-spaced steamer-trunk-sized monstrosity so full of gray area interpretation-needy gobbledegook that if the field agent, or his boss, or anyone up the ladder desires a scalp that day (for their employee file, y'know) then you're screwed --and to get unscrewed, you interrupt your routine, the routine that worked hard and smart is barely making a living anyway (and for certain not allowing enough sleep for the boss), and go to work dancing for the agency whim, doing the mickey mouse while the barn burns, fixing something that ain't broken, and going downtown to lobby the HQ --throwing away enough working hours or days to ruin your performance for the entire quarter.

Most microbusinesses can't afford much non-productive legal work, so the agencies go after them hard, saving their equanimity for the bigger companies that DO employ or retain an agency-interface lawyer.

The inspectors don't give a sh*t if you live or die. You are a bug, or maybe a feaure, depending on where your license happens to be bouncing around inside the agency's tragicomic internal turf squabbling.

The upshot is, whatever you're producing is going to be more expensive, less available, and likely lower quality. And you and your family's life (and your employees and their families lives) as well as your enterprise, made gratuitously more burdensome, less expansive, more pessimistic, less optimistic, more depressed, and less worth even bothering with, knowing that anyone of those guys can just idly flick your whole life's work into oblivion for no reason other than maybe one of doesn't like your face.

And all for what? To "make-work" for some lazy numbskull ticket-punching clock-watchers, that's what.

That's the Democrats, folks! That's what they do!

And my first vote was for Carter --I didn't start adulthood feeling this way at all. I was trained to it.

1:17 AM, October 05, 2009  
Blogger JG said...

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5:58 AM, October 05, 2009  
Blogger br549 said...

I should have paid more attention and book marked what I was reading yesterday. Seems the world's averaged individual income is about 5K. The U.S. is about 44K. By removing wealth from the U.S. and spreading it around, the world average could go up to about 7K, also bringing the U.S. average down to 7K. Common world wide problems need to be created, like AGW, that can be countered by cap and trade, etc. It's all very convenient.

The end game is what concerns me. It is what concerns us all.

Soylent Green, soon to be on a grocery store shelf near you - within driving distance of your battery powered car.

6:06 AM, October 05, 2009  
Blogger dr.alistair said...

one end game i see is about dealing with useless eaters.

especially as the robots get better at doing things.

9:09 AM, October 05, 2009  
Blogger Day said...

I'm in a position just a bit different than the several business owners Dr. Helen started her post with. I'm sitting on six figures in cash dedicated to starting a new entrepreneurial business, if I can find a profitable business opportunity. After evaluating a number of options in the past year and a half, I've not yet pulled the trigger. Why? The government, which should play a role as a "referee," has entered the game as a "player," and is and will be changing the rules as the game is played. I simply haven't found a bet I want to make under these conditions. So employment is reduced, and my investible capital sits on the sidelines with me expending energy thinking about what I need to do to keep the state from "appropriating" my savings.

9:41 AM, October 05, 2009  
Blogger Laura said...

@JG I don't see anyone "going Galt" in the way that Ayn Rand means it: People are continuing to do what they did, just in a more cautious way in this environment.

I've purposely limited my income in order to get out of the tax bracket I was in so I can support fewer moochers. Before Hurricane Katrina, my business employed two people. After Hurricane Katrina, I used independent contractors for that work. It was actually more work; I was just tired of paying a company to pay my employment taxes and keep my records in order so I could fear the IRS slightly less. Contractors were easier to deal with, but I no longer even do that. Now, I've purposely reduced my client base by more than half and seldom take on new work. I've stopped all advertising, outsourcing, and just about every other way my business used to interact with the economy. I work a lot less; just enough to get by month to month. I haven't got a gulch to go hide in but I've gone Galt to the greatest extent I can right now. I know other people who are doing the same.

9:45 AM, October 05, 2009  
Blogger Mil-Tech Bard said...

Helen,

There was a capital and small business expansion strike in the first six months of Clinton's first term, which ended quickly because Clinton convinced them he was an economic moderate. Remember Jim Carville’s crack about the Bond Market during the hillary-care debates?

Clinton's arrival in 1992 resulted in something like 3% of all small businesses shutting up shop before the inauguration, and there was a small-business loss in 1960-61 as well (I think that the Kennedy Administration was the first time it was noticed).

Obama has done and continues doing precisely the opposite of either Clinton or Kennedy in terms of both small business or big capital confidence. He is convincing both big capital and small businesses that they are right to fear the future, and to conserve their capital and energy because he will rob them of any return on their capital and personal labor investment.

It is quite clear Obama's crew and Congressional Democrats are completely oblivious to the above, and the National and World economy is catching it in the neck from lack of American small business economic activity.

Note, there is a difference between a capital strike by big business, and one by small businesses. The former, when it involves financial institutions, entails a refusal to lend to otherwise qualified borrowers.

The latter does not involve big business, and in particular it does not involve big finance.

It involves entrepreneurial aversion to risk, particularly the risk of expansion not producing an adequate return on sweat & capital investment, and more sweat investment than capital investment, because it is personal effort which defines entrepreneurs.

Threats by government can sometimes break a refusal by big finance to lend, but such threats only make entrepreneurs less willing to take risks. And right now both kinds of capital strikes are underway.

The big finance refusal to lend, however, means little when the critical qualified borrowers, i.e., small business entrepreneurs, aren't interested in borrowing.

That is why the American economic "bounce" that everyone in D.C. and the NY City financial markets had "programmed in" for the second half of 2009 is not happening. This is because the people who are expected to do it -- small business -- have taken their toys home to the house to wait out the Obama Admistration.

Given Obama’s health care reform, cap & trade energy taxes and union card check policy initiatives, he could not be doing a better job of hammering small business confidence. The small business lobby reported in Feb 2009 that something like 14% of American small businesses contributing to their organization have either folded since Obama's election or were planning to in the near future. (See http://gatewaypundit.blogspot.com/2009/03/dems-war-on-small-business-may-cause-14.html)

And Obama still (in Oct 2009!) hasn't settled on anything to settle the financial market's uncertainty.

Actions like the trip to Copenhagen for the Chicago Olympics bid shows that Obama would rather campaign that govern; AKA in terms of being a governing President, and dealing with the financial markets, he is dithering rather than making a decision.

Please note that President Obama's not making a positive decision to act on governing is a decision to farm out Federal governance to the Democratic Congress.

Since the Democratic Congressional leadership are in safe gerrymandered districts. We are seeing them hike taxes on "The Rich" so they can sell tax deductions for their campaign re-election funds.

It will require an immense amount of work and willful foolishness to bring about a depression, but the Obama administration has shown itself capable of such greatness.

This augurs for an economic disaster worse than Jimmy Carter's.

10:19 AM, October 05, 2009  
Blogger DADvocate said...

One of the small ironies I see in this is that the lefties are completely blind to this, even when totally immersed in it. My sister and her husband own a software company they started about 25 years ago.

They've never had any employees because the government red tape, paying FICA, worker's comp, withholdings, etc are so much trouble. Any work they can't do themselves, they contract out rather than hire someone.

Yet, although fully aware from their own experiences of the oppressive role of government towards small business, they support Obama and all the leftist programs the Democrats are proposing. Maybe since they have their big fancy house, etc already, they don't care what happens to anyone else.

It's just strange how the evidence in front of their own eyes is completely ignored.

10:38 AM, October 05, 2009  
Blogger Keith_Indy said...

This comment has been removed by the author.

12:15 PM, October 05, 2009  
Blogger Keith_Indy said...

This comment has been removed by the author.

12:25 PM, October 05, 2009  
Blogger Keith_Indy said...

tether - I sometimes feel like taking a spontaneous poke at self-important twits. That's all.

You should be poking yourself then.

If you were a libertarian, you ought to be sadden that the free exchange of services for money is being interrupted by our government.

I think people are taking "Going Galt" to literally. It's a metaphor for holding back on productivity and especially payments to the Leviathan.

We could perhaps say, we're "Going Solzhenitsyn" but after having to explain yourself every time, you'd be rather tired. Of course, he was talking about standing on your principles, so, even there it's a fuzzy parallel.

12:26 PM, October 05, 2009  
Blogger I R A Darth Aggie said...

I sometimes feel like taking a spontaneous poke at self-important twits. That's all.

Deer Tether, please find a mirror then fire at will. You'll be pleased with the results...

1:03 PM, October 05, 2009  
Blogger randian said...

Not even private companies are exempt from Sarbox. Private companies with more than 500 shareholders are subject to it, because such companies must by law become SEC reporting companies, and all SEC reporting companies are subject to Sarbox.

4:24 AM, October 06, 2009  
Blogger Mike said...

It is amusing to me that some want to argue, “this isn’t really ‘Going Galt’ because the motivations of real people aren’t the same as fictional ones.”

It’s like saying someone who jumped off a bridge because he couldn’t take it anymore is somehow deader than one who jumped because the voices in his head said he could fly. It’s the results that matter.

Small businesses, which provide the driving force behind the economy, aren’t hiring because the risk is too great considering the destructive amateurs in control in Washington.

Fine, the owners haven’t gone to a secret location to live by themselves, but have you seen the stats on the drop in tax revenues? Just because there is no real John Galt, doesn’t mean we aren’t seeing what was predicted in the book.

The only difference is that “going Galt” has been quietly going on for decades. How many small businesses don’t hire women or minorities because of fear of lawsuits if those people need to be fired? How many cap their growth to a level that lets them avoid dealing with burdensome regulations? How many hire strictly by word of mouth rather than take a risk on an unknown employee?

The unseen consequences of government meddling in the market for “our own good” have acted as an anchor on the economic growth for a long time. The current fiscal idiocy from our politicians is simply knocking a hole in the bottom of an already foundering vessel.

4:02 PM, October 07, 2009  
Blogger JG said...

Mike,

One of the differences is that real businesspersons would be back to doing whatever they could to make money - like a dog in heat on your leg - as soon as they thought the business environment was conducive to it.

People who were philosophically "striking" would not be.

That's just one of many differences. I don't know if I have the patience to write a longer post, especially to someone with a preset agenda.

6:10 PM, October 07, 2009  
Blogger Buddy Larsen said...

real businesspersons would be back to doing whatever they could to make money - like a dog in heat on your leg

Oh my goodness, JG. have you ANY idea how revealing that is?

You've admitted what so many of us know --that Obama's planners (such as you, JG, in spirit if not fact) have zero understanding of the meaning of 'free market'.

"Like a dog in heat" is so bad on so many levels, i'm not sure that there's any hope for you.

But hope springs eternal, so let me ask: Is whatever nasty trope that drives ruinous Pavlovian projections on all but leftist snots who (with no experience nor empathy with or for the private sector nor anyone in it) also the same geniusness that had this whole now-eighteen month economic/political scenario so well-mapped and understood?

And that is now getting terribly annoyed with us dogs who won't come hump Obama's (or JG's) figurative leg?

Good grief --talk about "...someone with a preset agenda" --did you REALLY say that?

Jeez, here we are, governed by no brains, no manners, no taste, no virtue, no tradition, no American values, and your planning manual (from the taxpayer-funded government printing office) says that by this time "all real businesspersons will be back to doing whatever they can to make money"?

Oops! well here, mr misery, please read what i had just read before clicking over to Dr. Helen from Instapundit tonite, from Dr. Thomas Sowell @

http://article.nationalreview.com/?q=OGQ3Y2YzZmQ2YzE0NzlmNTkyYTAxMDc4YTAxMmFlZWY=

(open quote)

Oliver Wendell Holmes said, “Think things, not words.” In words, many see a need for “social justice” to override “the dictates of the market.” In reality, what is called “the market” consists of human beings making their own choices at their own cost. What is called “social justice” is government imposition of the notions of third parties, who pay no price for being wrong.

(close quote)
Feh. the road ahead is dark.

3:36 AM, October 08, 2009  
Blogger JG said...

Buddy,

There's one set of people who develop their skills over time - foregoing gains for the time being - and then make money with those skills.

There's another set of people who have T-Shirts with the appropriate lettering and pictures out 0.5 seconds after some big event. They may actually make less money because they jump at every minor opportunity, not planning for long-term major opportunities.

I'm a little more reserved and like the people in the first set. But I'm not opposed to free enterprise at all, and you certainly read a whole lot into a throwaway saying.

Not that it matters all that much.

6:27 AM, October 08, 2009  
Blogger JG said...

So - in summary - you can go back to your self-righteous bubble, Buddy Larsen.

6:28 AM, October 08, 2009  
Blogger Buddy Larsen said...

Okeedoke, JG, back i go.

But re the dog in heat on your leg, at least get your biology right --

Male dogs are what get on your leg, and they don't get 'in heat'.

Female dogs have the estrus cycle ('in heat') but they don't, you know, do that to your leg.

But pray do continue with your insights --"real" businesspersons vs i suppose the ersatz variety?

6:51 AM, October 08, 2009  
Blogger JG said...

"Real" businesspersons as opposed to people who have checked out of the business world to make a point.

Now maybe I made a spelling mistake somewhere, you can hump my leg about that if you find one.

7:00 AM, October 08, 2009  
Blogger JG said...

Instead of

"real businesspersons would be back to doing whatever they could to make money - like a dog in heat on your leg -"

please substitute:

"real businesspersons would be back to doing whatever they could to make money - in an intense, fervent manner (much like the intensity shown by a sexually excited dog who attempts to copulate with your leg) -"

Thank you for your attention to this matter.

7:04 AM, October 08, 2009  
Blogger Buddy Larsen said...

You are quite welcome, Mr. JG, sir. Suggested substitutions and animal kingdom-related corrections duly noted and approved. Good Day.

7:14 AM, October 08, 2009  
Blogger Mike said...

Thanks JG - that clears everything up.

So move along everyone; there is nothing to see here. The results of all you skittish fake business folk hunkering down and not hiring and spending are totally different than those of the fictional businessmen in a 50 year old novel... or something.

But not to worry little lady, JG, real businessperson of genius, will have things back on track in a trice. And soon, all you tee shirt sellers will be back to leg humping and pushing your preset agendas just like before.

Well JG, chop-chop, get to it, and drop us the occasional missive letting us less farsighted types know how it’s going.

And JG, allow one of the peasants to offer some advice: The tee shirt shop where I work has a lot of competitors, but frequently is awarded contracts even if our prices are higher because we work very hard at not coming off as snotty, arrogant, pissants.

12:18 PM, October 08, 2009  
Blogger Robohobo said...

JG - You are an idiot. I am a very accomplished guy who cannot find a job, any job, anything, FOR A FRAKKIN' YEAR.

....and the horse you rode in on....

1:28 AM, October 09, 2009  
Blogger Prime Designer said...

One of the things that was said about the great depression. Was that if you had a job you were fine.

But if you didn't, you were in trouble, since no one was hiring for years.

2:54 PM, October 10, 2009  

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