News
11/19/2009 — A different thought on creating jobs
In honor of Global Entrepreneurship week--
A different thought on creating Jobs
This week is considered the most innovative week of the year- Global Entrepreneurship week, November 16-22, 2009. In the eyes of many, entrepreneurship equals jobs. What creates jobs? It actually very simple- Employers with profitable businesses, innovating and creating wealth. As long as entrepreneurs and investors have reduced opportunities to create wealth, unemployment will remain high. No amount of stimulus money throw at big business or one time government projects is going to create permanent, newly created jobs.
According to James Sherk, Bradley Fellow in Labor Policy in the Center for Data Analysis at The Heritage Foundation, to reduce unemployment, Congress needs to encourage firms to innovate, invest, and take risks--and Congress must remove policies that discourage them from doing so. Only one policy proposed by President Obama would encourage innovation and job creation.
“During the election campaign, Candidate Obama had proposed eliminating the capital gains tax on startup companies. Repealing the capital gains tax on startups would encourage more venture capital investment in new businesses” says Sherk. Since the banks aren't lending money to the small business sector, it makes send that the Government would want other parties, such as VC's, to invest aggressively. “Most new businesses fail. Venture capital funds invest in many new companies and make up the losses of the many failures with large profits on the handful of startups that do succeed.”
If Congress repealed the capital gains tax on startup businesses, investors would earn greater after-tax profits on the few successful startups. The higher returns would encourage venture capital funds to invest in more new companies, including some riskier ventures they will not now invest in. The greater profits from successful companies would compensate for the risk of failure from others. The net result would be more investment, more startup businesses, and more jobs. This would increase job creation and lower unemployment, according to Shrek.
A broader, more powerful policy would be for the President and the Congress to commit to restraining spending to alleviate this threat of higher interest rates and higher inflation. They should also commit to raise no taxes and impose no new burdens on businesses at least until the economy is approaching full employment. This means no rate hikes for health care reform, no rate hikes to pay for the massive hike in federal spending, and no new assessments associated with global warming legislation.
American businesses and the American economy need time to recover and heal from this deep recession before facing new threats from massive government intervention in the economy. Presented with a more certain path forward, businesses will regain their optimism for the future, and will resume making the investments they need in order to expand and to compete in the global marketplace.
Congress and the American public should understand that increased layoffs are not the main reason unemployment has risen. While layoffs have increased, the larger factor increasing unemployment has been businesses cutting back on investment and entrepreneurs starting fewer new companies. Consequently they have created fewer jobs. Hundreds of billions in federal spending will not spur private-sector investment and risk-taking. A third stimulus bill will not promote job creation or reduce the unemployment rate any more than the first two. Congress should reject any calls for a third stimulus package.
I hope you have a great Entrepreneurship week
- Todd Palmer
Diversified Industrial Staffing is a nationwide recruiting / staffing firm headquartered in
Atlanta - Baltimore - Boston - Charleston - Charlotte - Chicago - Cincinnati - Dallas - Detroit - Fort Worth - Greensboro - Greenville - Houston - Indianapolis - Kansas City - Little Rock - Los Angeles - Milwaukee - Minneapolis - Nashville - Newark - New York City - Orlando - Peoria - Philadelphia - Raleigh - Rochester - San Antonio - St. Louis - Seattle - Springfield - Trenton - Tucson - Washington D.C. - Wichita
Our homepage is www.diversifiedindustrialstaffing.com
