Tag Archives: economic recovery

Where’s the Austerity?

Here’s a letter I recently sent to The Economist:

SIR – you write that the “collective obsession with short-term austerity across the rich world is hurting” the prospects for global economic recovery; be afraid.

May the data allay your fears. From 2000 to 2010, the UK’s government spending boomed from 36.6 percent of GDP to 51.0 percent. France’s spending went from 51.6 percent to 56.2 percent. Even sober Germany grew its government from 45.1 percent of GDP to 46.7 percent.

When Bill Clinton left office, total U.S. government spending was 33.9 percent of GDP. It has blossomed to 42.3 percent under Presidents Bush and Obama.

If the rich world is indeed austerity-obsessed, it is no more than talk. That’s why this writer is afraid.

RYAN YOUNG
Fellow in Regulatory Studies
Competitive Enterprise Institute
Washington

*All data from OECD, downloadable at http://dx.doi.org/10.1787/888932443396

My colleague Greg Conko pointed out that the letter might be more persuasive if it used data from 2008-2010, to isolate government growth since the Great Recession’s start.

It’s a good point, so I looked it up. And the song remains the same. France’s government grew from 52.9 to 56.2 percent; Germany’s grew from 43.8 to 46.7 percent; the UK’s grew from 47.4 to 51.0 percent; and the U.S. grew from 39.0 to 42.3 percent. All that in three short years.

How to Help Small Businesses

Politicians love small businesses. Almost every campaign stump speech gushes about how important they are for the economy. Never afraid to put our money where their mouth is, politicians even started a Small Business Administration in 1953 to transfer money from taxpayers to small businesses. Today, the SBA’s budget is nearing $1 billion.

Given how much taxpayer money politicians lavish on small businesses, most of elected officials are confident that they are helping, not hurting. They should listen more closely to the consituency they claim to love so much. The Bush-Obama era has been one of ever-increasing regulation. Over 30,000 new rules hit the books under Bush. Obama is regulating at an even faster pace. Many of their rules hurt small businesses.

Paychex, Inc., a payroll service provider that works with many small businesses, recently commissioned a survey. They asked small business owners their thoughts on the economy, and what the biggest obstacles are to growing their businesses. The most common gripe? Regulation. 47 percent of small business owners say that regulations have “slowed or prevented” their business from growing.

The Rochester Business Journal reports that the types of regulations that most concern small business owners are “tax changes (56 percent), health care reform (39 percent) and state regulations in response to budgetary challenges (25 percent). The research found 61 percent of respondents have seen more government regulation over the past five years.”

If Congress is genuinely interested in helping small businesses while speeding up economic recovery, it’s time for a different approach.

Transferring money from taxpayers to small businesses doesn’t help the economy on net. It actually hurts it. One reason is that the prospect of free money encourages small businesses to redirect their energy from entrepreneurship to K Street. Another is that government largesse tends to be given out according to political interests, not consumers’ interests.

Federal regulation alone costs $1.75 trillion to comply with. Congress should lighten the load. 47 percent of small business owners say that regulation has made their business grow more slowly. Letting that 47 percent grow more quickly would go a long way toward getting the economy growing again.

The Nobel Case for Immigration

Over at The American Spectator, my colleague Alex Nowrasteh and I make the case for expanding skilled immigration. Our main points:

-1 in 8 Americans are foreign-born, but 1 in 4 American Nobel laureates since 1901 are foreign-born. Immigrants, it seems, are chronic overachievers. America would benefit by letting more in.

-The H-1B visa for skilled immigrants is capped at 85,000. In non-recession years, those 85,000 spots are typically filled in a single day.

-Genius-level intellects are missing out on the chance to flower at the world’s best universities. They’re also missing out on one of the world’s best entrepreneurial environments. And Americans are missing out on cutting-edge jobs in high-tech fields. Consumers lose out on products that are never invented.

-The number of Nobel-caliber intellects who have lost their opportunity to do research in this country is unknown. What is known is that the U.S. government has kept out millions of the most inventive, brilliant, and entrepreneurial people in the world for no good reason.

Read the whole piece here.