The state of our economy is grim, and there is little reason, at least from a policy perspective, to believe that it’s going to experience a robust recovery anytime soon.
The January employment data from the Bureau of Labor Statistics piled on the bad news of the last few months. In January, according to the payroll survey, 598,000 jobs were lost. Compared to the December 2007 peak, 3.57 million jobs have disappeared.
But most critically, what is going on in the private sector, and what about entrepreneurship? After all, it is private-sector growth and job creation that matter most for the economy. And it is the entrepreneurship that drives our economy forward.
The payroll data tells us that private sector employment fell by 604,000 in January, and has toppled by 3.74 million since December 2007.
Meanwhile, the household survey, while more volatile from month to month, tends to capture more entrepreneurial, start-up activity. By that survey, the economy lost 1.24 million jobs in January. And from its high in November 2007, employment has declined by 4.57 million.
Unfortunately, none of the measures being batted around in Washington’s “stimulus” debate are going to help remedy this situation. The economy needs a major effort to help re-energize private investment and entrepreneurship. That means changes like deep reductions in personal and corporate income tax rates, eliminating capital gains and death taxes, and allowing all businesses to expense capital expenditures in the year they are made. And the private sector needs to be assured that these are permanent changes. For good measure, a major initiative to rollback costly and unnecessary regulations is very important.
Of course, though, none of this is in the policy mix right now. This is the era of silly, left-wing economics. As a result, we’re getting temporary, targeted tax cuts, an unprecedented expansion in government spending, and an emphasis on more regulation.
So, the private sector, led by entrepreneurs and investors, must fight off costly, intrusive government, while working on their own to get our economy back on track.
– Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council, and a columnist with Long Island Business News.