The reason I do NOT trust mainstream media has been due to their innate tendencies to manipulate information to dovetail to their political biases.
The recent survey of US small businesses which exhibited signs of declining optimism is just one good example.
Writes the Wall Street Journal Blog, (bold emphasis added)
“Nobody knows the trouble I’ve seen.” That’s the song small-business owners around the U.S. are singing. But it isn’t regulation, tax policy or credit constraints causing the woes. It’s the lack of customers.
The widely watched survey of small businesses done by the National Federation of Independent Business shows optimism in August was the lowest since July 2010 when the recovery last hit a soft patch. The drop to 88.1 was the sixth consecutive decline — a record string of declines in the index.
What the author would like to present is that the woes of small businesses has been due to the lack of aggregate demand (lack of customers). Because from the Keynesian perspective this means that government intervention should take the place of the private sector, thus justifying more stimulus.
But it’s a totally different story when seen from the actual National Federation of Independent Business report.
Here is the NFIB Economic Trend Report for September 2011 with commentary from William C. Dunkelberg and Holly Wade (bold emphasis mine)
The August survey was mailed out as Congress and the Administration reached their “deal” to curb spending and reduce the debt/deficit problems. Had this been a convincing one to “Main Street,” confidence would have improved and, likely, also spending and hiring. But, NFIB’s confidence measure took a dive as did the University of Michigan’s consumer confidence Index which produced its lowest reading since 1980. In particular, it was expected real sales gains and expected business conditions in 6 months that plummeted in the NFIB report. These two components by themselves lowered the Index 2.1 points versus the total loss from all 10 components of 1.8 points. With such a dim outlook, owners are not going to do a lot of hiring or expanding.
Business expansion, the purchase of new equipment and vehicles and even hiring are “long term” investments. Most important to the decision process is the sales forecast, but against expected sales over the life of an asset, the owner must figure in labor costs, taxes, the cost of new regulations, financing costs and the like to decide whether or not an “investment” will pay off. This is one reason why “short term” stimuli don’t work. The planning horizon for the private sector is longer than the time to the next election!!! At this point, no one knows what their tax rate will be 6 months from now; no one knows what the health care will do to labor costs. Higher for sure, but by how much? Yes, the President suspended costly EPA rules that were going into effect, but you know that they will be back after the election if he wins
The NLRB is pushing the union agenda, card check, mandating owners to post notices of the right to unionize, interfering with Boeing’s business decision making (and the President’s Chief of Staff was on Boeing’s board when the South Carolina project was approved). Supporters of the Administration are pushing for another hike in the minimum wage and the new CEA chairman favors and wants a national sales tax to be imposed. It would take a book to itemize it all. Short-term fixes will not help, private sector decision makers think longer term – they do and they don’t like what they see, there is little clarity or certainty. Consumer spending is still a key factor and 9 of 10 people who want a job still have a job and would spend more if they were more confident about the future
And here is the NFIB’s press release calling for President Obama to repeal employer mandates (bold emphasis mine)
The National Federation of Independent Business is again pushing to repeal the employer mandate in the Patient Protection and Affordable Care Act (PPACA) on the heels of President Obama’s ask for bipartisan job creation. There is currently legislation in Congress to repeal the employer mandate, and the NFIB has long-supported and championed this important initiative.
“At the same time that President Obama is asking small-business owners to create jobs, his very health care law is preventing them from doing so,” said Susan Eckerly, Senior Vice President of Federal Public Policy at NFIB. “In fact, small-business owners will tell you that they are suffering a crisis of confidence right now that prevents them from expanding and hiring; how do they move forward with job creation when the unknown costs stemming from the policies of the past few years continue to stand in their way?
“Instead of advocating for more Washington spending bills that do little to help the situation that small-business owners are currently drowning under, Congress should immediately review and repeal some of the policies of the past few years that stand between an employer and an employee. Simply put, the repeal of the employer mandate is an important step toward sound, long-term job creation.”
Provisions of the health care law, such as the employer mandate, have left many small-business owners unable to expand operations as they brace for new costs and taxes coming out of Washington. The health care law requires that employers with 50 or more full-time equivalent employees offer “affordable, minimum essential [healthcare] coverage” beginning in 2014.
Lastly NFIB economist William Dunkelberg says in this video that in order to raise capital we need savings and not stimulus.
This has NOT been an issue of tax policy or government regulation? Duh!
So the Wall Street article either did not the read the report and instead arbitrarily replaced their conclusions over the NFIB's context, or has equivocated on the survey result of NFIB.
Nonetheless the biggest problem weighing on US small businesses, whom signifies as the largest employers of the US economy, generally can be described as “regime uncertainty” or the assault to private property rights through the legal and regulatory channels which heightens the economy’s risk climate and which subsequently reduces the incentive by entrepreneurs and business people to spend on investments required for job growth.
Regime uncertainty, best defined and enunciated by economist Robert Higgs, (as previously posted) as having to do (bold emphasis mine)
with widespread inability to form confident expectations about future private property rights in all of their dimensions. Private property rights specify the property owner’s rights to decide how property will be used, to accrue income from its uses, and to transfer these rights to others in various voluntary arrangements. Because the content of private property rights is complex, threats to such rights can arise from many different sources, including actions by legislators, administrators, prosecutors, judges, juries, and others (e.g., sit-down strikers, mobs).
Because of the great variety of ways in which government officials can threaten private property rights, the security of such rights turns not only on law “on the books,” but also to an important degree on the character of the government officials who administer and enforce the law.
Thanks to the internet we can weed out prevarications and or political propaganda.
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