Friday, April 26, 2013

This Is As Good As It Gets

The GDP announcement this morning for the first quarter of 2013 was 2.5 percent, well below the 3 plus estimates that economists were expecting.    This will not be the first disappointment.  Folks like Jim Cramer on CNBC can't understand why businessmen are reluctant to expand capital equipment and hire employees.  That's because Cramer is a media celebrity not a businessman.

If Cramer were even remotely aware of the actual business climate that ordinary folks have to contend with, he would know what the problem is -- over regulation, absurd tax levels, Obamacare, EPA regulations, Dodd-Frank.  It is almost as if the Obama Administration has declared war on the US economy.  Anything that smacks of business success is viewed suspiciously by the Administration (and by Jim Cramer, I might note).

The talking heads can't figure it out, but the economics are simple.  If hiring an employee at a $ 35,000 salary means it costs you $ 75,000 per year, you are not going to make that hire.  End of subject.

Why the simple economics of hiring and firing eludes people like Jim Cramer is amazing.

There is no reason that health care costs should be borne by employers.  None....no reason at all.  But one thing is certain, if employer bears the cost of health care, they are going to be reluctant to make new hires and anxious to reduce their existing work force.  Why is that hard for the Obama fans like Jim Cramer to figure out?

Citizens should finance their own health care.  That would keep costs down and make the market efficient, as in the provision of anything else in a market economy.  The only way to get health care costs to spiral out of control is to get the government involved. 

There is so much double talk in an attempt to circumvent the obvious facts on the ground.  The economy is grinding to a halt in Europe and in the US.  The West is in deep, deep trouble.  They have drunk the nectar of socialism and wealth redistribution.  All of that feels good for a while until the economy begins to fall apart.  We are now witnessing the collapse of the West.

This is not going to get better.  It is going to get worse.  Economic policies in Europe and in the US are not designed to make economies grow.  They are designed to make economies fair, according to the fairness whims of the political elite.  That kills economic growth.

So, get used to it.  This is as good as it gets.

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