I’m going out on a limb and predicting that President Obama will talk about jobs in the State of the Union address tonight. It’s an easy bet because he has often claimed that jobs are a prime focus for his administration, just as he said back in 2010:

Oh yeah, President Obama has been great about creating jobs. Here’s a graph from the government explaining how we needed to pass a huge stimulus to help America recover from high unemployment numbers. And tacked on the government chart are the actual unemployment numbers. Looks like the stimulus was a success!

August 2012 Unemployment

But there’s a problem with the President saying he wants to create jobs: the government can only create government jobs. It is incapable of creating private-sector jobs. That is the responsibility of — hello! — the private sector. The force of government can best be compared to the brakes on a large truck. The brakes are incapable of making the truck go any faster, but they have a great deal of influence when it comes to slowing things down. Likewise, government isn’t designed to create jobs, but through its actions, laws, and regulations, government can exert a great deal of influence in slowing down the economy, which leads to job scarcity. The uncertainty of Obamacare, the way government has blocked the building of the XL Pipeline, and regulations by the EPA that are causing coal-fired power plants to shut down are three examples of government slamming down the brakes on the American economy.

Back in November 2011, DNC Chair Rep. Debbie Wasserman Schultz said the following to Andrea Mitchell of NBC News, with regard to the American Jobs Act:

“Well, we’re not focused on polls. I mean, we’re a year away from an election. The president is focused like a laser on passing the American Jobs Act, on making sure that we can put people back to work.”

Like a laser, huh?

Focused like a laser on jobs

The AP news story starts off with the title of “Initial jobless claims increase unexpectedly.” My initial reaction was disbelief. How could the current unemployment be anything but expected?

The number of newly laid-off workers seeking unemployment benefits rose last week, a sign that jobs remain scarce even as the economy recovers.

The Labor Department said Thursday that first-time claims increased by 18,000 in the week ending April 3, to a seasonally adjusted 460,000. That’s worse than economists’ estimates of a drop to 435,000, according to a survey by Thomson Reuters.

“…a sign that jobs remain scarce even as the economy recovers.” What? How can the economy be said to be recovering when jobs continue to hemorrhage away? I also have to laugh at the way the economists are constantly surprised by the unemployment numbers. It’s not all that surprising to me.

Quite simply, the principal purpose of a business is to make money. A business that doesn’t make money soon stops being a business, and all its employees are then out of a job. The more uncertain the future, the more uncertain businesses become about hiring and expanding. And hiring people and expanding business is exactly what will get us out of our current recession. Why would a business hire people and purchase equipment if the likelihood of making a profit is dubious at best? And what is producing that uncertainty? Government, of course.

The massive health care overhaul has passed. What does that mean for additional taxes and fees to businesses? At this point, it’s too soon to tell. After all, the Senate version was passed, but the House is still fighting for its changes to be reconciled into the law. That is producing uncertainty.

People in the White House are talking about tax increases. What will those tax increases be? Will they be focused more on people or on businesses? And if businesses are targeted, will the increased taxes apply to all businesses or just businesses over a certain number of employees? If additional tax burdens apply to a business once it has 51 or more employees, what would a struggling business with 51 or 52 employees likely to do? If you say “fire enough people to drop below the new tax level,” you’re right, and obviously not a government economist. So the prospect of increasing taxes is producing uncertainty.

In the same Reuters report talking about increasing taxes, Paul Volker also floated the idea of a European-style value-added tax. If you think our current tax system is complex, the VAT adds yet another layer of complexity on top of it. And his comment doesn’t show any assurance that our current income tax would be replaced by a VAT, so I’m left to believe that we would have a VAT on top of our current income tax. Adding a VAT to business would produce uncertainty.

Even though much of the science behind human-caused global warming has been shown now to be fraudulent, eco-freaks and people in government are still pushing for a carbon tax. Since everything humans do, including simply breathing, produces CO2, a carbon tax would affect every business, and not in a nice way. Discussion of a carbon tax like Cap and Trade produces uncertainty.

The tax breaks signed into law by President Bush are scheduled to expire in 2010. Will Congress renew the tax breaks, or will it let them expire? The expiring tax breaks would mean a hike in the taxes paid by businesses, and increasing taxes on businesses just puts an additional burden on them in an already tough economy. Not knowing whether the current tax breaks will remain or vanish away produces uncertainty.

Every time government steps into a business and tells it what it may or may not do, it is creating uncertainty. Will this meddling change with the next administration? Will it change with the next big scandal or witch-hunt? Toyota is being pummeled by the government for a run-away acceleration problem which is most certainly mostly hype and partially driver error. But government, who controls Toyota’s competitors, is creating a hostile work environment and fining Toyota over this latest bugaboo. Not knowing if government will allow a business to actually do its job produces uncertainty.

Government isn’t able to create wealth; it can only take it from one person to give to another. And while it is transferring the wealth, some of it sticks in the bureaucracy, so this wealth transference isn’t efficient. Likewise, government cannot create jobs that will stimulate the economy. The most it may do is create government jobs that require taking more of the nation’s wealth to feed the bureaucrats. And that way does not lie prosperity, just more government bureaucracy.

To promote the common welfare, stimulate the economy, and foster the creation of real jobs, government needs to make it easier for businesses to do their business. Our government could easily do that by lowering taxes and reducing uncertainty. But as long as this administration, or any other one, continues to make the future scary and uncertain for businesses, we will be slow to exit this recession, and businesses will be reluctant to hire new people or even keep all of their employees on.

Next time you read that joblessness or recession numbers are unexpected, you may rest assured that you are dealing with someone who doesn’t understand business, even if they have a Ph.D. in economics. Why else would they be so surprised?

No matter how you slice it, we don’t have much by way of good economic news. The unemployment numbers for September 2009 came out, and the news isn’t good.

Job losses moderated in August, but the unemployment rate ticked up 0.1 percentage point to 9.8%, the highest level since June 1983.

But another more comprehensive gauge of unemployment ticked up even more. The government’s broader measure, known as the “U-6? for its data classification, hit 17% in September, 0.2 percentage points higher than August.

The comprehensive measure of labor underutilization accounts for people who have stopped looking for work or who can’t find full-time jobs. The U-6 figure is the highest since the Labor Department started this particular data series in 1994. But, similar to the headline unemployment rate, it likely isn’t as bad as it was in the 1980s. U-6 only goes back to 1994, but a discontinued measure has a longer history. That old U-6 measure peaked at 14.3% in 1982. Through some calculation, a comparable measure can be determined in the current report. Under the old U-6 methodology, the September rate would be 13.5%, the highest rate since 1983, but still below the peak.

Ow. But things could be worse! President Obama has praised the $787 billion economic stimulus plan he signed, claiming pie-in-the-sky numbers before his inauguration:

President-elect Barack Obama said on Saturday an analysis of his stimulus proposals showed that up to 4 million U.S. jobs could be saved or created by 2010, nearly 90 percent of them in the private sector.

Obama said previously his estimated $800 billion plan to lift the country out of a yearlong recession would create or save 3 million jobs, but the new analysis showed that number would range between 3 million and 4 million.

Good thing the stimulus package was passed. If we hadn’t passed it, the White House predicted we’d have unemployment as high as 8.8% instead of the 7.9% unemployment we have now, thanks to the stimulus package.

Wait, what?

Unemployment

That’s right — Obama predicted that without the stimulus package, unemployment would peak out at a nasty 9%, but thanks to his skillful leadership, it would not crest 8%. So, who are you going to believe, Obama, or the lying Bureau of Labor Statistics?

I’ve read that our economy has already turned the corner and the economy is improving, so why aren’t the jobs coming back? And why should they come back? When a business hires someone, the business is looking to the future and confident about what it holds.

But what is there to inspire confidence in business today? Is government going to pass a Cap and Trade bill that will greatly increase the cost of energy and doing business? Is government going to meddle with the banking industry again? Is government going to take over the health care industry? Is there anything government won’t mess with in the next few months, let alone the next few years? If I were an employer, I’d be scared spitless about what the future holds, and I’m not sure if I’d be willing to bet my company on what the government will or won’t do.

Uncertainty about the future, mainly at the hand of an increasingly meddling government, explains why the job market shows no sign of recovery. Here’s a graph that puts the current recession in perspective.

Unemployment trends

The economy would do much better if the government would get out of the way.

Have you heard the news? The U.S. unemployment rate increased 0.5% between April and May 2008, going from 5.0% to 5.5%. The immediate result of this report is a flurry of news stories bemoaning unemployment and reaching for their thesauruses to come up with good scare words: jumped, soared, leaps. Here’s a snippet of an MSNBC story:

The nation’s unemployment rate jumped to 5.5 percent in May — the biggest monthly rise since 1986 — as nervous employers cut 49,000 jobs.

The latest snapshot of business conditions showed a deeply troubled economy, with dwindling job opportunities in a time of continuing hardship in the housing, credit and financial sectors.

“Jumped” appeared in the title and first paragraph. “Soared” appears in the fourth paragraph, and “leaps” appears in the RSS feed title for this story. All of this reminds me of something Red Planet Cartoons published in April:

It's a matter of perspective

Stocks have taken a dive because of this hand-wringing report, but what does this news story identify as the cause of the “continuing hardship”? “Housing, credit, and financial troubles” all turn out to be the same thing.

Earlier in the decade, the government essentially forced lending companies to offer loans to people who were poor credit risks, or they’d be branded and punished as horrible racists and discriminating goons. Now — surprise, surprise — a number of people who were poor credit risks due to their unstable financial behavior are defaulting on these risky loans. Government stuck its foot in front of the housing, credit, and financial sector, and now government is reporting that this sector has taken a tumble. Well, duh! What do ya expect?

Certain politicians are always talking about government as though it could singlehandedly fix the economy. In truth, there are a few ways our government could have an immediate effect on our economy: namely, if it released the restrictions on ANWR oil drilling, oil refinery building, off-shore oil drilling, and nuclear power plant construction. Those four endeavors would open up thousands of jobs in construction and maintenance alone, not to mention the number of jobs created to support them. As an added bonus, we would be increasing our domestic energy supply at a time when there is an ever-increasing demand. Increasing the supply would mean a decrease in the cost of energy, and that would benefit our economy, and the world’s economy as well. And the increase in supply would most likely lead to decreased prices at the gas pump.

Or you could try electing liberals to government whose only promise is for “change” — what kind, exactly? — and whose actions show they prefer to restrict our energy supply so you have to pay more at the pump. So how, exactly, are liberals for the little guy?

UPDATE (6/9/2008 10:25:27 PM): Jerry Bowyer at TownHall.com posted a reason for the spike in unemployment in May — the minimum wage increase Congress passed last year:

Congress is to blame. Last year Congressional Democrats (along with some Stockholm-Syndromed Republicans) passed the Fair Minimum Wage Act of 2007, which started a phased hike of the minimum wage from $5.15 an hour to $7.25. Free market economists warned them that this would increase unemployment – that rapid increases in unemployment compensation hit teens and minorities the hardest. But the class-warriors are running the people’s house now, and they would hear none of that, so they took to the floor, let loose the dogs of demagoguery, and saddled America’s pizza parlors, municipal swimming pools, house painting businesses and lawn mowing services with a huge cost increase.

Now, we see the perfectly logical outcome of wage controls – rising unemployment among the most economically vulnerable. The chart above tells the story: Friday’s unemployment spike occurred overwhelmingly among teenagers, and secondarily among African Americans. Just like we said it would. A kid who is at entry level of job skills may be a good deal at 5 bucks an hour, but not at 7. Our anointed leaders gets to glory in their generosity (with other people’s money) and just so long as very few people in the media know that a demand curve slopes downward (a good bet, there), no one calls them on it.

Which makes yet another way the government has caused this problem.