The current version is what Forbes columnist John Tamny calls the Washington “political class” making war on “profits.” Tamny’s evidence is today's Democratic agenda of
➢ imposing a 24¢ a barrel tax on oil profits;
➢ taxing financial institutions $50 billion to create a new bailout fund, and;
➢ ordering airlines (already struggling to stay airborne) both to pay a 62.5% higher fine for bumping passengers, and to provide refunds to passengers whose bags arrive late.
An concerned Tamny notes, “there is no investment without profit, and there are no jobs without investment.” Of course, the “tribute” voters want is jobs, jobs, jobs. Democrats fail to grasp this lesson at their peril.
The main point: the private sector, not government, creates jobs. When government sets out to pillage the private sector, the problem’s not that the private sector stops creating jobs out of spite, it’s rather that the private sector can’t create jobs. As Margaret Thatcher put it, “The problem with socialism is that eventually you run out of other people's money.”
Like Tamny, Charlie Gasparino at Fox Business Network (and formerly with CNBC) is upset about the Washington “political class’s" economic decisions. Gasparino discusses the stimulus plan’s failure to create jobs, and the time wasted on health care:
instead of spending the money on building roads and bridges, states have hoarded much of the stimulus cash to keep their own workforces fat and happy. While the construction industry suffers 20% unemployment, state and local governments are keeping employment at the DMV just humming along. . .
Gasparino believes our failure to nurture the private sector echoes the Great Depression:
[What] made the Great Depression so devastating was that people were out of work for long periods of time. . . the unprecedented meddling of government came at a price: Businesses faced an uncertain future, so they simply refused to hire. . .
Gasparino concludes, therefore, that Obama is “a throwback to a different era—a time when unemployment remained high yet the president talked an optimistic game and ‘prosperity was just around the corner.’”
Here’s the wrong answer: beat up on business to create jobs. Here’s the right answer: help business create jobs. If Obama persists in pursuing the wrong answer, he might as well, as Gasparino suggests he’s doing, talk like Herbert Hoover.
And don’t doubt for one second that governing's about creating jobs. We now are learning how truly dependent the stock market is on job creation. Elizabeth Trotta, in the Wall Street Journal’s “Smart Money,” outlines what some call the tool for predicting short term stock market moves: the weekly jobless claims report. Cantor Fitzgerald’s Marc Pado thinks the two are correlated because weekly jobless claims actually do impact the daily market’s moves.
On the “Fund my Mutual Fund” blog, “Trader Mark” writes about the same finding. What works best is a rolling four-week average of the jobless claims. It inversely correlates closely with the S&P 500 average, as the chart below indicates. Jobless claims are a “coincident indicator” of where the market’s moving, unlike the more famous and more closely watched Department of Labor’s monthly unemployment report, which is a lagging indicator.