by Victor Davis Hanson<\/p>\n
National Review Online<\/em><\/p>\n You don\u2019t produce wool by skinning the sheep. But that seems to be the present strategy to get small businesses to begin hiring, buying, and expanding.<\/p>\n There is apparent surprise among Obamians that unemployment has soared the last six months. The much-anticipated stimulus sputtered, and there is a sense of bewilderment in the administration about why joblessness and economic growth are stagnant after the government injected trillions of dollars into the system.<\/p>\n Perhaps the Obama administration needs to remember the psychology of business. After the shock of the September meltdowns, the natural reaction of anyone whose livelihood relied directly on markets was to conserve, pull in one\u2019s horns, and ride out the mess. To restart the paralyzed economy called not just for printing money, but also for words of encouragement to businesses that their assets would be safe, interest rates would be stable, and their work would lead to greater profits.<\/p>\n Instead, exactly the opposite message was sent in a time of crisis. Take first the \u201cspread the wealth\u201d rhetoric. The impression created in the last half-year is that business is culpable for the new mess, while unions and the general public are victims who need relief from the greedy.<\/p>\n Everyone is angry at the Masters of the Universe on Wall Street, but under Obama ironies abound: Banks and investment houses, whose recklessness largely caused this problem, have been lumped in with the small-business person as the kindred \u201cwealthy\u201d who make over $200,000 a year. The family dentist, neighborhood contractor, and owner of the local insurance firm feel neither wealthy nor culpable in the fashion of AIG or Lehman Brothers. If one wishes to stimulate the economy, it makes no sense to conflate productive small businesses with financial-sector zillionaires as enemies of the people.<\/p>\n Team Obama also talks of taxation as if it was slicing salami \u2014 a little slice here for new FICA taxes on income above $250,000 (or is it $200,000 or is it $150,000?), another little piece cut off for new income-tax rates of about 40 percent, an additional chop for a surcharge for health care, and then let the poor states have a go with more whacks for increased sales and income taxes. The result is that though each slice may seem tiny in itself, in the aggregate there is not much salami left. Paying out 50 percent of one\u2019s income in taxes may not be socialism, but paying out 70 percent surely is.<\/p>\n For the wheat farmer, electrical contractor, and 20-person law firm, the strategic calculus now goes something like this: \u201cI think I just lost about 20 percent of next year\u2019s income to pay for more income, health-care, state, sales, and payroll taxes, so I won\u2019t be buying that tractor, doing any more Saturday jobs, or hiring that new litigator.\u201d Worse still, many may add, \u201cI will begin reducing or hiding income, avoiding taxes, and dealing in barter to save my business \u2014 rather than paying for vast new dubious entitlements for someone else.\u201d These reactions may be unfounded, even wrong, but they are based on logical conclusions nonetheless, considering the promiscuous rhetoric of taxation that emanates daily from the Democratic Congress and the White House.<\/p>\n Worse still, businesses see long trends ahead that in their reckoning are disturbing. They realize that even though they will soon be paying whopping new taxes, these contributions will neither balance the budget (given the new spending) nor win them any psychosocial satisfaction from \u201cpaying their fair share.\u201d<\/p>\n More likely, the president will continue to demonize businesspeople, as if their compliance in paying new taxes is proof that such new taxes were long overdue \u2014 and evidence of their ability to pay even more. Remember, impressions, not just reality, are important right now in giving businesses the confidence to once again take risks.<\/p>\n Nor is there any certainty about investment and interest rates. How does one borrow or lend when there is no indication how a $2 trillion deficit, and another $9 trillion in proposed debt, are to be serviced? Will it be by inflation, more taxes still, higher interest rates \u2014 or all three? Why would a bank this year lend at 4.8 percent for 30 years when it suspects it may be forced to pay 10 percent on passbook accounts in the near future?<\/p>\n And when small businesses turn to vent their grievances to government, they see almost no one who has ever met a payroll, hired new employees, or purchased equipment. Instead there are plenty of Ivy League technocrats, whose past worlds involve economic theorizing, tenure, lifetime job security, and much experience in regulating productive others.<\/p>\n Had Barack Obama run a Chicago law firm, or had Timothy Geithner created a software company, perhaps they would have some understanding of all the psychological impulses that determine whether businesses gamble or freeze up. It does not help to suggest that those who make above $250,000 are somehow self-indulgent \u2014 while our populist first couple flies in cooks, serves $100-a-pound beef, wears $400 tennis shoes, and seems to enjoy the life of the rich and famous as much as they deplore it in others \u2014 especially given the past tax hypocrisy of Geithner, Daschle, Solis, and others. We are a long way from the lives of Harry and Bess Truman.<\/p>\n Nor does government accept any blame. One could argue that our Barney Franks and Chris Dodds were as culpable for the Fannie\/Freddie meltdown as any Wall Streeter, and, in matters of probity and ethics, as lax \u2014 given their compromised positions as simultaneous regulators and donation recipients. Instead, they almost seem to think that if they blame others for the crises, we will forget their culpability. The message is again clear to business: \u201cYou made the mistakes; we, the morally superior beings, are here to put you back on the right path \u2014 and if you don\u2019t like it, we are the only game in town.\u201d<\/p>\n Then there are all the other random business-bashing efforts. Americans were shocked by the AIG bonuses, but to deny them would have involved potentially violating the workers\u2019 contracts. In the bailout, GM\u2019s creditors soon discovered that traditional rules of risk and exposure did not matter, because the government deemed some creditors more morally worthy than others.<\/p>\n Add in new regulations about charitable donations, and again the message is clear: \u201cYou need to be taxed more, regulated more, and preached to.\u201d At no point did the Obama administration warn the American people that they must not spend more on their credit cards than they can pay back, take out mortgages for more house than they can afford, or spend on extraneous things rather than save for essentials like catastrophic health insurance.<\/p>\n The imagery was instead that 280 million Americans had been cheated by banks, gouged by credit-card companies, neglected by government, and held at the mercy of business \u2014 innocent children unable to think or act on their own behalf. That demagoguery may win elections, but it turns off businesses and persuades them to sit out the next few years in puzzlement over what the new landscape and rules will be.<\/p>\n So the proper question is not why is unemployment rising, growth stagnant, and the future uncertain \u2014 but rather why\u00a0shouldn\u2019t<\/em>\u00a0all this be true, with worse still to come?<\/p>\n \u00a92009 Victor Davis Hanson<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Obama’s economic plans are relentlessly hostile to small business. by Victor Davis Hanson National Review Online You don\u2019t produce wool by skinning the sheep. But that seems to be the present strategy to get small businesses to begin hiring, buying, and expanding.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[714],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p466Sb-FO","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":9165,"url":"https:\/\/victorhanson.com\/wordpress\/the-buck-never-stops-here\/","url_meta":{"origin":2592,"position":0},"title":"The Buck Never Stops Here","author":"victorhanson","date":"March 17, 2016","format":false,"excerpt":"Victor Davis Hanson \/\/ Tribune Media Services In a cover story in the latest issue of The Atlantic magazine, President Obama offers astonishing scapegoating for his own foreign policy disasters.According to Obama, the deterioration of the ISIS wasteland that is now Libya was not due to improvident administration bombing followed\u2026","rel":"","context":"In "The Middle East"","block_context":{"text":"The Middle East","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/the-world\/the-middle-east\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1424,"url":"https:\/\/victorhanson.com\/wordpress\/obamas-economic-quackery\/","url_meta":{"origin":2592,"position":1},"title":"Obama’s Economic Quackery","author":"victorhanson","date":"November 25, 2011","format":false,"excerpt":"by Victor Davis Hanson National Review Online Sometimes the wrong medicine can make a struggling patient far sicker than he would have been had he been allowed to recover naturally. 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The Democratic and Republican candidates barnstorm the nation to make their cases. Not this year. Democratic nominee Joe Biden is more or less a virtual candidate, mostly communicating from home\u2026","rel":"","context":"Similar post","block_context":{"text":"Similar post","link":""},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7156,"url":"https:\/\/victorhanson.com\/wordpress\/untruthful-and-untrustworthy-government\/","url_meta":{"origin":2592,"position":3},"title":"Untruthful and Untrustworthy Government","author":"victorhanson","date":"March 27, 2014","format":false,"excerpt":"The massaging of critical data undermines our society. by Victor Davis Hanson \/\/\u00a0National Review Online\u00a0 Transparency and truth are the fuels that run sophisticated civilizations. Without them, the state grinds to a halt. Lack of trust \u2014 not barbarians on the frontier, global warming or cooling, or even epidemics \u2014\u2026","rel":"","context":"In "Political Culture"","block_context":{"text":"Political Culture","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/american-culture\/political-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/victorhanson.com\/wordpress\/wp-content\/uploads\/2014\/03\/2619159204_dfe4e2befa-300x295.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":6697,"url":"https:\/\/victorhanson.com\/wordpress\/obamas-credibility-gap\/","url_meta":{"origin":2592,"position":4},"title":"Obama’s Credibility Gap","author":"victorhanson","date":"October 31, 2013","format":false,"excerpt":"The former hope-and-change president no longer gets a pass. by Victor Davis Hanson \/\/\u00a0National Review Online\u00a0 By 1968, President Lyndon Baines Johnson was finally done in by his \u201ccredibility gap\u201d \u2014 the growing abyss between what he said about, and what was actually happening inside, Vietnam. \u201cModified limited hangout\u201d and\u2026","rel":"","context":"In "Punditry"","block_context":{"text":"Punditry","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/opinion\/punditry\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2488,"url":"https:\/\/victorhanson.com\/wordpress\/is-the-president-in-recovery\/","url_meta":{"origin":2592,"position":5},"title":"Is the President in Recovery?","author":"victorhanson","date":"August 1, 2011","format":false,"excerpt":"by Victor Davis Hanson Tribune Media Services President Obama does not care much about deficits \u2014 other than worrying that big debt might matter in his re-election campaign. 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