After recent comments by President Obama (see my last post), there followed a debate about the individual's role in the economy and that of the government's.
We have numerous examples where individual initiative and hard work led to successful enterprises (Thomas Edison, Henry Ford, Ray Kroc and Steve Jobs to name a few). What are the conditions for such individuals to succeed and what is government's proper role?
It is true that government at all levels can have a positive influence in promoting economic activity such as insuring the public safety, providing education and the building and maintenance of public roads. But what is the government's proper role in the regulation of business?
In an article in this weekend's edition of the Wall Street Journal (7/28 & 29) "Why Capitalism Has an Image Problem" by Charles Murray, the author states that any new government "intervention meet this burden of proof: It will accomplish something that tort law and enforcement of basic laws against force, fraud and collusion do not accomplish". He goes on to say that large enterprises can cope with regulatory burdens, such as the Dodd-Frank law, but those regulations can crush small businesses and individuals trying to start small businesses.
In a separate article in the Journal on 7/23/12 ("Firms Pass Up Tax Breaks, Citing Complexity), John D. McKinnon cites numerous examples of tax breaks in the tax code that are so complex and costly to administer that many companies do not claim them. He states that "eligible businesses obtain as little as 5% of the main domestic tax breaks that they are entitled to claim".
Capitalism is defined as: "An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production and the distribution of goods that are determined mainly by competition in a free market". (Merriam-Webster Dictionary).
Any government that unduly intervenes in the free market system not only diminishes our freedom but threatens our prosperity as well. One could argue that we are well on the road to that conclusion and the results are evident for all to see.
We have numerous examples where individual initiative and hard work led to successful enterprises (Thomas Edison, Henry Ford, Ray Kroc and Steve Jobs to name a few). What are the conditions for such individuals to succeed and what is government's proper role?
It is true that government at all levels can have a positive influence in promoting economic activity such as insuring the public safety, providing education and the building and maintenance of public roads. But what is the government's proper role in the regulation of business?
In an article in this weekend's edition of the Wall Street Journal (7/28 & 29) "Why Capitalism Has an Image Problem" by Charles Murray, the author states that any new government "intervention meet this burden of proof: It will accomplish something that tort law and enforcement of basic laws against force, fraud and collusion do not accomplish". He goes on to say that large enterprises can cope with regulatory burdens, such as the Dodd-Frank law, but those regulations can crush small businesses and individuals trying to start small businesses.
In a separate article in the Journal on 7/23/12 ("Firms Pass Up Tax Breaks, Citing Complexity), John D. McKinnon cites numerous examples of tax breaks in the tax code that are so complex and costly to administer that many companies do not claim them. He states that "eligible businesses obtain as little as 5% of the main domestic tax breaks that they are entitled to claim".
Capitalism is defined as: "An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production and the distribution of goods that are determined mainly by competition in a free market". (Merriam-Webster Dictionary).
Any government that unduly intervenes in the free market system not only diminishes our freedom but threatens our prosperity as well. One could argue that we are well on the road to that conclusion and the results are evident for all to see.
Again, a fine article by Norm. When discussing government intervention into private business, please allow me to add a couple thoughts which maybe only a small business owner would recognize, for example: when un-employment benefits were extended from 26 weeks (remember when) up to 99 weeks, the money to pay these benefits comes from un-employment payroll taxes to the state, who administers the program. You may imagine when millions of people around the country are, at the stroke of the pen, given another 13 weeks of benefits, the additional burden on the "fund". In Florida, the state had to borrow money from the feds in order to comply with the extended benefit legislation. Florida was not only charged interest on these monies, but these additional interest costs were passed onto all Florida businesses in a separate bill each of the last two January's, along with a rate increase. Another example I will state as coming from the Child Labor laws. Did you know that all employees under the age of 18, who work more than a four hour shift must receive an UN-INTERRUPTED 30 minute break. Now many people have never given this any thought yet many small businesses may operate with two people working at a time. Think about a Subway store for example. You have summer break from school and you schedule a couple of 17 year olds the late afternoon/evening shift when business only supports two employees. One employee begins their break and next thing you know, here comes a few customers at the same time. The employee on "break" cannot, per law, be interrupted. So my business has customers who must wait because a teenager must have an un-interrupted break. So, I refuse to hire anyone under age 18. Lastly, couple this with minimum wage increases (now $7.67 in Fl.). By the time you add the additional costs of the wage along with the un-employment and workers comp insurance (both based on payroll), that "minimal" increase is more than meets the eye. Want a laugh? The article Norm referred to by McKinnon talks about tax breaks passed up by business. There was one such tax break enacted which took effect in February of last year. This was a tax break for hiring a new employee who worked at least 25 hours per week or so (memory only so don't quote as fact). To get the deduction for this past tax year, the new employee had to be employed for at least 12 consecutive months. So how do you get 12 consecutive months when you start in February and end the tax year in December? My accountant and I got a laugh out of this one.....So when one considers how Obamacare was written, think about these last minute "dealmakers" thrown into legislation which are touted as helping create jobs. "It's" all in the details, as we found out with the H.H.S. Mandate which took away our religious liberties. We may think about legislation and all the pros/cons we may hear discussed, but many cons are skillfully disguised or maybe, nothing more than incompetence or both.......and as we found out with Obamacare, details to be finalized by the "appropriate" government department led by, in these past four years, Obama appointees.
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