The New Abnormal

posted at 2:16 am on August 14, 2010 by Doctor Zero

Back in June, Vice President Joe Biden made one of the bizarre statements for which he has become famous, as reported by CBS News:

Vice President Joe Biden gave a stark assessment of the economy today, telling an audience of supporters, “there’s no possibility to restore 8 million jobs lost in the Great Recession.”

Appearing at a fundraiser with Sen. Russ Feingold (D-Wisc.) in Milwaukee, the vice president remarked that by the time he and President Obama took office in 2008, the gross domestic product had shrunk and hundreds of thousands of jobs had been lost.

“We inherited a godawful mess,” he said, adding there was “no way to regenerate $3 trillion that was lost. Not misplaced, lost.”

There’s no possibility those jobs will ever come back?  Really?  The American economy simply decided to wipe out eight million positions?  The real unemployment rate, counting long-term discouraged workers who have dropped out of the labor force entirely, is over 16%.  Some metrics place it closer to 21%.  Does anyone really believe that the free market, of its own accord, would choose to leave a fifth of the working population idle?

Notice the typical, pathetic bleat about how it’s all George Bush’s fault.  Jobless claims hit a six-month high after Biden’s remarks, so I guess dejected businessmen still awaken in the middle of the night, haunted by the memory of George W. Bush, and fumble out their Blackberries to terminate employees until they feel better.

The New Abnormal is becoming a big part of the Democrats’ pre-election spin.  Americans are supposed to accept their reduced standard of living and shrunken economy.  They should lift their watery eyes in gratitude to the noble Democrat Party, which won’t let any semblance of fiscal responsibility stop them from looting the future to provide endless unemployment benefits.  The entire concept of unemployment has become a welfare hammock, with people like Biden essentially telling the jobless that a substantial number of them (eight million!) can expect to spend the rest of their lives that way.  As Chuck Schumer, the tired old hack who will succeed Harry Reid as Senate majority leader unless Americans really wake up and roll to the polls in November, puts it:

“It’s the world we’re in. It’s a much more negative, critical world, and people are sour now,” he said. “The thing they’re most sour about is the future, not the present. In other words, if people were sure that things would be better five years from now, they’d be less sour.

“Given that, I think people are more negative right now across the board — the right wing is more negative, the left wing is more negative, the center is more negative. That’s how it is.”…

Schumer, by the way, arrived in the Senate two years before the election of George W. Bush.  His party has held the Senate majority since 2006.  But try not to think about that.  Just hate Bush, and accept the sad new future over which Democrats preside as mournful, helpless custodians.

There’s nothing terribly mysterious about our high unemployment rate.  The primary engine of job creation in the United States is small business, which is generally held to produce about 70% of new jobs.  This is easy enough to understand.  Large corporations strive to maintain relatively stable work forces.  They might have big layoffs after financial setbacks, or hire new people as they introduce new products or expand sales operations, but their growth is relatively slow.  A large number of small businesses can be expected to grow more explosively, and require more human capital, as they discover market opportunities.

Investment in human capital takes time to mature.  You’ve got to train people after you hire them, and weed out unsuitable employees during their probationary periods.  For this reason, businesses staff to meet future needs.  It does little good for a manager to look around on a Thursday afternoon, and suddenly realize he could use a couple more people.  These decisions must be made in advance.

Large businesses tend to be much more confident about long-term financial predictions than small ones.  They’ve got highly skilled accountants on staff, and consultants on retainer.  The little guy does not have the resources to see quite as far ahead.  This naturally makes small businesses more nervous about uncontrollable forces which might increase costs in the near future.  They can’t absorb cost increases as well as large corporations can.  Small business owners often develop a rapport with their employees, and hate the idea of hiring someone in May, only to find themselves forced to let the new person go in August.

These factors combine to make the small businessman – seated at the controls of America’s engine of job growth – highly responsive to negative income and cost projections.  This Administration has absolutely hammered the small businessman with enormous costs and mandates.  Growing enough to cross the line that triggers the heaviest burdens of ObamaCare can swiftly obliterate a small business.  Reckless deficit spending makes them nervous about monetary policy.  Gigantic bills no one has read – or, in one especially shameful case, named – are packed with buzzing swarms of unintended consequences.  It’s no coincidence that unemployment grew worse as the land mines strewn through the ObamaCare bill began detonating.  Who knows what will come next?  There are some blood-curdling sounds coming from the fetid swamp of that lame-duck session of Congress.  It’s obvious from all the “unexpected” economic news that no one in Washington knows what they’re doing.

If rising labor costs lead to unemployment, then a helping of pork-fried “stimulus” should make businesses hire people, right?  Of course not.  Employment is a long-term relationship.  Businesses, especially small ones, hire people to meet future needs, not to collect one-time subsidies.  Thin curtains woven from taxpayer dollars cannot hide the predatory government currently in power… or the uncertain future of command economics, driven by irrational ideology, it offers.

With politically connected unions and mismanaged blue states teetering on the edge of collapse, they can anticipate even greater transfers of money from private to public sectors… which will mean even greater burdens for what remains of private industry.  Every small business owner knows that his personal income turns him into a target for this Administration and Congress.  Artillery is already incoming from the expiring Bush tax cuts.  Why take risks, when the rewards will simply be confiscated by a ravenous government?

There is no reason for a sensible small businessman to do anything but dig in, protect his assets, and await less greedy, more competent leadership.  The decision to reject the New Abnormal will be made at the ballot box, not in the boardroom.  That’s why nobody is hiring right now.  We all understand that we need to fire a bunch of people in Washington first.

Cross-posted at www.doczero.org.

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