Study debunks the right: Business hiring a product of demand, not taxes or politics

[sixmile]

http://articles.chicagotribune.com/2010-08-25/business/ct-biz-0825-gail-small-biz-20100825_1_small-business-owners-nfib-stock-market

'What's stopping small businesses from hiring?

One popular storyline of the recession is that small businesses, which employ about half the work force, are afraid to hire because they don't know what health care overhaul and tax changes will mean. Based on that narrative, some stock market observers have been predicting that the November election will finally be a turning point — erasing uncertainty about politics and at last freeing the stock market to climb.

But analysts who have delved into business decision-making are shooting holes in that assertion. They see a simpler truth.'

snip

'To test the assertion that taxes and other political factors are weighing down employment decisions, de Kock analyzed surveys of small-business owners done by the National Federation of Independent Business over the last 37 years.

"The results are unambiguous," de Kock said. "They overwhelmingly indicate that weak demand, rather than government policies, accounts for firms' reluctance to expand."

That's been true historically and recently. As he dug into small-business sentiment since 2005, he found that taxes and regulation drove only 12 percent of the reluctance of small-business owners to expand, while weak demand accounted for 87 percent.

In other words, to use a slogan from the Clinton/Bush election, de Kock concluded: "It's the economy, stupid! And only about a sixth is: It's Washington, stupid."'

[Cassandra]

1. Well, duh!

I get calls regularly (used to be humans, now robocalls) offering me money for my business. I suppose I could just gear up and produce a new line of jewelry, cheaper than my old one but who would buy it? The mindset of tootling down to the mall and engaging in retail therapy is a bit lacking right now.

[bherrera]

2. Would it ease the hiring practices if the USA had social medicine?

I believe it would improve hiring if the USA had a basic social medical care, such as Medicare is used for old people, applied to all citizens and legal residents. This would be a very basic medical care, which the individual can expand if this is desired, using a supplemental private insurance system. Thus, the small employer does not have to worry about the provision of medical insurance for employees, and this reduces paper work.

[Cassandra]

3. It would make things easier for everyone...

except the insurance companies.

[ellenfl]

4. can we say this louder than the rw noise machine? eom

[unblock]

5. tax cuts make sense only in very limited circumstances

in order for a capitalist economy to hum along nicely, you need good supply, good demand, and a reasonable way for businesses to finance and profit from delivering supply to those who demand it.

so tax policy is really only an issue if all the other elements are in place and taxes are the only thing that keep suppliers from keeping a reasonable profit. THAT'S IT.

if supply ain't there, tax policy won't discover raw materials.
if demand ain't there, tax policy won't build stores consumers that businesses know consumers won't shop at.
if banks aren't there, tax policy won't raise funds for entrepreneurs.

only if all those things are there and the tax rates are SO high that businesses can't figure out a way to make a reasonable profit, THEN AND ONLY THEN does it make sense to consider a tax cut OF SOME FORM -- and even there, a targeted tax cut, e.g., a tax credit or deduction for specific things, would likely make more sense than an across-the-board RATE cut, which would be a windfall to people in industries that weren't a problem.

[TreasonousBastard]

6. In some businesses, income tax hikes could INCREASE hiring...

since the money would be taken out of your pocket one way or the other, why not hire someone to ease the workload instead of giving it to the government?

[Wilms]

7. I couldn't agree more. n/t