How Obama Might Just Break Even on JobsBy C. Edmund Wright
As Barack Obama leaves the White House on January 20, 2013 -- as I suspect he will -- do not be surprised if he leaves just about dead even on job loss/creation for his term officially. I mean literal net/net.
Huh? Yes he can! In fact, he's halfway there already.
Consider: out in the real world -- outside Washington, D.C power and Manhattan's esoteric hedge/arbitrage/derivative bubble -- business owners realize what is going on, and the best of them pounce on reality-based opportunities -- or crises -- the minute these become evident. They instantly adjust how they build or service or distribute their thingamajigs without the rigamorole of inaugurations and such. And a quick check of the calendar shows us that in a full one-term presidential cycle, there is nearly a half year's business of lame duck time coming and going. And that half-year includes the most crucial time for many businesses.
You see, there is no single talent that is more important for a business owner than the ability to "see around the corner" and adjust his or her enterprise accordingly. Millions of them saw around the corner in fall of 2008 -- and they did not wait for Nancy Pelosi to start reading watchamacallit (legislation) before they started handing out doohickeys -- er, pink slips.
A quick perusal of the bloody jobs history of the United States the past four years will demonstrate this in such stark terms that only a Paul Krugman or a Ben Bernanke could misinterpret. Oh, and perhaps Julia, too.
The first really bloody month of job losses was...let's see...oh yes! November of 2008. Over 530 thousand jobs were cut that month, and then something like 600 to 700 thousand jobs were vaporized in each of the next two months. Now these million and a half to two million jobs are officially -- yes, officially -- on George W. Bush's record. But you tell me: did something happen in early November of '08 that perhaps precipitated all of this?
Indeed it did. Hope and Change we can believe in. And businesses believed in it so much that they positioned themselves early for the carnage. While Atlas Shrugged -- the movie, the attitude, and the reality --happened out across the 57 states, the mainstream and the financial media purred along in oblivion, whining about "headwinds" Obama inherited.
In reality, Obama didn't inherit headwinds. Obama's socialist business model simply blows. And I don't mean "doing a little blow back in the day" either.
All of this was utterly predictable, and business owners utterly predicted it by their actions. I am included in that number, virtually shutting down an enterprise of some 20 years by shedding nearly a hundred jobs. We were not alone. Atlas was shrugging rapidly all over the country in late '08 and early to mid-2009. I think even Obama's sons might have lost a job or two.
The calculus was simple, really, even if no one at CNBC besides Rick Santelli understood it. Like many business owners, we were simply no longer willing to take all of the financial and legal risks and put up with all of the aggravation of owning and running a business under the coming hope and change. We instinctively understood that on the near horizon were even higher taxes, more regulation, more litigation, and more emboldened bureaucrats. In case you are not aware, entrepreneurs and bureaucrats do not get along.
Like others we knew, we were getting out while the getting was tolerable. Many who did not get out scaled way back. Check the job loss stats.
Some even learned in December of '08 that getting out of business is harder than they thought. Remember Chicago's Republic Windows & Doors? They discovered that being out of thingamajigs like money and customers was no excuse to shut down and lay precious union folks off. Someone please notify Milton Friedman!
Moreover, their banker found out that none of that reality was an acceptable excuse to withhold credit. According to the unions, Jesse Jackson, and the Governor of Illinois (yes, that governor), this company had to pay its employees' salaries and benefits regardless of reality.
Of course, pay them with what? you ask. Liberals are clueless as to where "the money" comes from. They love to tax, regulate, and redistribute wealth -- all the while decrying the very dynamics and motives that created that wealth. I am convinced they think the Solyndra model is the way all businesses work -- thus their obsession with government power. The idea of building a better mousetrap so the world will beat a path to your door is foreign to them -- thus the model of building an expensive union mousetrap and subsidizing or even forcing folks to buy. Can you say "Chevy Volt"? Those stupid damned light bulbs with mercury in them? Chrysler's bondholders?
Entrepreneurs have very little appetite to have their lives run by elected or un-elected officials like Barney Frank or Jamie Gorelick. We have no appetite to be taxed even more by the likes of Charlie Rangel. We don't want to live under the dictates of Chris Dodd while he luxuriates in a home made possible by a quid-pro-quo Countrywide mortgage. These are the clowns who destroyed Fannie Mae, Freddie Mac, and our domestic energy industry, and thus our entire economy.
Congress, by their own admission, cannot even run their own Senate Dining Room with a captive customer base! In late '08 and early '09, the question was, why in the world would we subject ourselves to their ilk, armed with the unchecked powers of the Oval Office and both houses of Congress and a massive army of bureaucrats to run our businesses?
The answer is that many would not. Many shrugged. And some 2 million jobs were lost officially on Bush's watch. Which brings us back to our initial thesis, which was that Obama would leave office net even on jobs officially. And that he is in fact halfway there. Those two million jobs lost prior to O's inauguration are that half.
So where does the other half come from?
If the election thesis holds, the other half will come when Atlas gets back into the game between November 6, 2012 and January 20, 2013. During those 75 days -- while the media is wringing hands and the financial pundits are lost in their haze of conventional wisdom -- entrepreneurs will be busy. They won't need to know the details of "new policy" then any more than they needed to know them back in late '08. They will smell the opportunity.
An Obama loss in '12 will be reflective of a huge mood shift in the country. Businesses and customers will sense it -- just as they sensed the opposite mood shift upon Obama's triumph in 2008. The smartest businesses were the first to shrink four years ago -- and the smartest will be the first to expand in 2012 and early 2013.
So don't be surprised if a million or more jobs are added between Election Day 2012 and Inauguration 2013. It will be good news, yet the liberal pundits and historians will be quick to credit those to Obama just as they blame Bush for the lost jobs during that same 75-day period four years ago. It will just about bring Obama to net even on jobs. Ironically, fear of Obama will work to his statistical legacy on the way in and on the way out.
So be it. The important thing to watch is that this makes those 3-4 million job shifts going back to 2008 the number-one election issue -- for the 2014 midterms. Be prepared.
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