The
great recession that we are currently still enduring has been very
rough on workers. If you perform a quick calculation of where the
unemployment rate should be in the United States (taking into account
productivity increases, young people entering the workforce, and
where the unemployment rate was when the recession started), the
current unemployment rate should be almost 15%.
The
only reason we are not at that rate is so many people have dropped
out of the workforce.
The
unemployment rate used by the media does not count people that have
given up looking for work. Taken to the extreme, if everyone that
does not have a job quit looking for work, we would have an
unemployment rate of 0%. This of course is crazy.
The
question is why can’t the U.S. economy create any jobs? This
past month, 114,000 jobs were created. This is not even enough to
keep up with young people entering the workforce. I am here to give
you some answers. I will reveal three easy steps that the government
can do to get the economy growing again. None of them cost the
taxpayer a dime.
First
it is good to remember how large the U.S. economy is in the world.
Our gross domestic product is approaching $16 trillion. You would
have to combine the economies of China, Japan, and Germany to have an
economy as large as the United States. If we can start to really
grow, much of Europe’s problems will be solved.
The
first step is to radically decrease the cost of energy.
This
is the easiest step to complete. The federal government needs to
allow for off-shore drilling again, construction of the keystone
pipeline, extraction of the oil in ANWAR, and they need to stop
trying to kill the coal industry. I believe that there is no reason
why we should be paying more than $2 a gallon at the gas pump.
What
kind of difference would this make? Let me tell you the impact just
on my family. We live a little out into the country and have to fill
up our three cars once a week. That means we put in about 15 gallons
a week in each vehicle. At $4 per gallon, that is $180 per week or
$720 per month. So cutting the cost of gas in half means we would
have an extra $360 every month to spend on other products.
Multiply
those savings over all Americans and that is an incredible influx of
demand for goods and services in our economy. Way too much of the
money we spend at the pump is sent to other countries to purchase
their oil. Having that money in our economy would help us grow.
That is not even considering the impact this reduction would have on
businesses. They would have a major cost to grow, produce, and
transport products cut in half.
High
energy cost is a choice we are making by restricting the supply.
This insanity has to stop.
The
second step is to simplify the tax code.
The
tax rates need to decrease, and many deductions need to be
eliminated. These deductions are distortions in the market, and the
lower rates will help encourage investing and growth. I am not
talking about decreasing tax revenues. With the rate the government
is spending and increasing our debt, we cannot afford to decrease tax
revenues. But by lowering the tax rates and keeping revenue neutral,
the government will be creating incentives for the economy to grow.
The
third step is to stop acting like business is the enemy.
It
is time for politicians to quit vilifying entire industries and free
markets. If you listen to what some politicians say, you would think
that oil, finance, coal, manufacturing, soda, beef, and airline
industries were completely evil. Just not saying anything
negative would be a huge step in the right direction. They need to
quite talking about obscene profits and the need to spread around the
wealth. They need to quite talking about regulating everything and
how people succeed only because of the beneficence of the all
powerful government.
As
someone recently said, “Stop It.”
It
takes great courage to start or expand a business. Knowing that the
government is on your side would help more take the plunge.
These
three steps seem so simple but they could have a profound effect.
Many economists are now predicting that we will not get the number of
people unemployed back to pre-recession levels until way after 2020.
This is entirely unacceptable. It is time for our government to put
people first.
Adam Smith is obviously not the actual name of the author of this column. The real author has
worked for two Fortune 500 companies, one privately held company, and a public accounting
firm. His undergraduate degree was in accounting, and he earned an MBA for his graduate
degree. He also has completed coursework for a PhD. in finance. He continues to be employed
by one of the Fortune 500 companies.
The author grew up in the Washington D.C. area but also lived for several years in Arizona. He
currently resides with his family on the East Coast.
The author has held various callings in The Church of Jesus Christ of Latter-day Saints.