Wintery Knight

…integrating Christian faith and knowledge in the public square

Niall Ferguson argues that government is making it harder to run a business

In the Wall Street Journal.

Excerpt:

Seven years of data suggest that most of the world’s countries are successfully making it easier to do business: The total number of days it takes to carry out the seven procedures has come down, in some cases very substantially. In only around 20 countries has the total duration of dealing with “red tape” gone up. The sixth-worst case is none other than the U.S., where the total number of days has increased by 18% to 433. Other members of the bottom 10, using this metric, are Zimbabwe, Burundi and Yemen (though their absolute numbers are of course much higher).

Why is it getting harder to do business in America? Part of the answer is excessively complex legislation. A prime example is the 848-page Wall Street Reform and Consumer Protection Act of July 2010 (otherwise known as the Dodd-Frank Act), which, among other things, required that regulators create 243 rules, conduct 67 studies and issue 22 periodic reports. Comparable in its complexity is the Patient Protection and Affordable Care Act (906 pages), which is also in the process of spawning thousands of pages of regulation. You don’t have to be opposed to tighter financial regulation or universal health care to recognize that something is wrong with laws so elaborate that almost no one affected has the time or the will to read them.

[...]Each year, the World Economic Forum publishes its Global Competitiveness Index. Since it introduced its current methodology in 2004, the U.S. score has declined by 6%. (In the same period China’s score has improved by 12%.) An important component of the index is provided by 22 different measures of institutional quality, based on the WEF’s Executive Opinion Survey. Typical questions are “How would you characterize corporate governance by investors and boards of directors in your country?” and “In your country, how common is diversion of public funds to companies, individuals, or groups due to corruption?” The startling thing about this exercise is how poorly the U.S. fares.

In only one category out of 22 is the U.S. ranked in the global top 20 (the strength of investor protection). In seven categories it does not even make the top 50. For example, the WEF ranks the U.S. 87th in terms of the costs imposed on business by “organized crime (mafia-oriented racketeering, extortion).” In every single category, Hong Kong does better.

At the same time, the U.S. has seen a marked deterioration in its World Governance Indicators. In terms of “voice and accountability,” “government effectiveness,” “regulatory quality” and especially “control of corruption,” the U.S. scores have all gone down since the WGI project began in the mid-1990s. It would be tempting to say that America is turning Latin, were it not for the fact that a number of Latin American countries have been improving their governance scores over the same period.

Whatever the root causes of the deterioration of American institutions, smart people are starting to notice it. Last year Michael Porter of Harvard Business School published a report based on a large-scale survey of HBS alumni. Among the questions he asked was where the U.S. was “falling behind” relative to other countries. The top three lagging indicators named were: the effectiveness of the political system, the K-12 education system and the complexity of the tax code. Regulation came sixth, efficiency of the legal framework eighth.

Asked to name “the most problematic factors for doing business” in the U.S., respondents to the WEF’s most recent Executive Opinion Survey put “inefficient government bureaucracy” at the top, followed by tax rates and tax regulations.

The troubling thing to me is that the private sector has to make a profit in order to fund government, and I don’t see that the private sector will be able to producing the profits needed to fund our government’s lavish spending. Nothing that I see about the next generation causes me to believe that they understand economics enough to vote to improve the business climate. They seem to be very much anti-business. One wonders where they expect to find jobs.

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Why do corporations ship jobs overseas? What causes outsourcing of jobs?

World Corporate Tax Rates

World Corporate Tax Rates

Here is a news story from Yahoo News that explains the problem and the cause of the problem. (H/T Dad)

Excerpt:

Large U.S. companies boosted their offshore earnings by 15 percent last year to a record $1.9 trillion, avoiding hefty tax bills by keeping the profits abroad, according to a new report.

The overseas earnings stockpile has climbed by 70 percent over the past five years, said research firm Audit Analytics. Data in its report covers the Russell 3000 index of the largest U.S. corporations.

U.S.-based multinationals do not have to pay U.S. corporate income tax on foreign earnings as long as the earnings do not enter the United States. Accounting rules also let the companies avoid recognizing a tax expense if management intends to keep the earnings indefinitely reinvested overseas.

“It would probably be nice to have this money in our country being used in our economy, but at the moment we see it growing elsewhere,” said Don Whalen, general counsel and director of research at Audit Analytics.

Conglomerate General Electric Co (GE.N), had the most indefinitely reinvested overseas earnings, at about $108 billion, while drugmaker Pfizer Inc (PFE.N) was next with $73 billion, according to Audit Analytics.

The simple answer is that Americans believe that corporations need to pay high taxes and operate under burdensome regulations. This eats into their profits, making it harder for them to grow and expand. The plain truth is that it is easier for corporations to expand and hire in countries with lower taxes and fewer regulations. Besides, who wants to be wiped out by a nuisance lawsuit just because someone spills coffee on themselves and then refuses to take responsibility? The smart play is to just opt out completely, and that’s what many corporations do – earning higher profits in more business-friendly countries.

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Surprise! Social Security ran a $47.8 billion dollar deficit in 2012

CNS News reports.

Excerpt:

The Social Security program ran a $47.8 billion deficit in fiscal 2012 as the program brought in $725.429 billion in cash and paid $773.247 for benefits and overhead expenses, according to official data published by Social Security Administration.

The Social Security Administration also released new data revealing that the number of workers collecting disability benefits hit a record 8,827,795 in December–up from 8,805,353 in November.

The overall number of Social Security program beneficiaries—including retired workers, dependent family members and survivors and disabled workers and their dependent family members—also hit a record in December, climbing from 56,658,978 in November to 56,758,185 in December.

In 2011, according to the Bureau of Labor Statistics, there was an average of 112.556 million full-time workers in the United States, of whom 17.806 million worked full-time for local, state or federal government. That left an average of only 94.750 million full-time private sector workers in the country.

That means that for every 1.67 Americans who worked full-time in the private sector in 2011, there is now 1 person collecting benefits from the Social Security administration.

There are about 310 million people in the United States.

Now consider that the same people who make you wait in line at the post office and the department of motor vehicles are teaching your children in public schools. What are the children learning there? Are they learning marketable skills so that they will be able to get private sector jobs and pay for these programs? No, they are learning about recreational sex, global warming, feminism, gay activism and other leftist dogma. They learn how to feel offended, how to blame men, how to blame white people, how to blame job creators (“the rich”), and how to blame the our armed forces.

We have borrowed over one trillion dollars from future generations to pay for these entitlement programs, and there is no reason to believe that a bunch of brainwashed children will be up to the task of paying for those entitlements. We shouldn’t be aborting 1 million unborn children a year either – we should be marrying and raising them with two opposite sex parents. The welfare state is just not sustainable when we destroy the supply line of new law-abiding productive workers. We have a growing public sector parasite feeding on a shrinking private sector host. It just won’t work for much longer.

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Is Obama telling the truth about creating 5.2 million new jobs?

From Yahoo News, of all places.

Excerpt:

In a new TV ad, President Obama makes an inflated claim to have added 5.2 million new jobs. The total added during his time in office is actually about 325,000.

In the ad, the president says “over 5 million new jobs” while the figure “5.2 million” appears on screen. But that’s a doubly misleading figure.

  • Viewers would need to pay close attention to the on-screen graphic to know that the ad refers only to employment gains starting in March 2010, omitting the 4.3 million jobs that were lost in the first year of Obama’s term.
  • And there’s no way a viewer would know that the total counts only private-sector jobs, omitting continuing losses in government employment.

According to the most recent employment figures from the Bureau of Labor Statistics, the economy has eked out a net gain of 325,000 jobs since January 2009, when Obama took office. And that’s giving credit for roughly 386,000 jobs that the BLS has announced, on a preliminary basis, that it will be adding to this year’s employment totals next year, as a result of its routine annual “benchmarking” analysis.

Looking only at private-sector jobs, it’s true that the total has risen just under 5.2 million since February 2010 — provided that credit is given for roughly 453,000 private-sector jobs to be added next year through the BLS benchmarking process. But over Obama’s entire term, those private-sector jobs have gone up only 967,000, even counting benchmarking additions.

The Heritage Foundation puts the number even lower, at 316,000 jobs created in the last 30 months.

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Romney wins first debate: spanks dazed and confused Obama like a foolish child

The debate was the worst ass-kicking in a Presidential debate that I have ever seen.

The transcript is here. And here’s the story on what went down.

Excerpt:

GOP presidential challenger Mitt Romney tonight charged that President Barack Obama’s jobs plan is a failure, with millions out of work and looking for help.

“My plan is to put people back to work in America,” Romney said tonight at the first of three presidential debates scheduled for the 2012 presidential election season.

“Look at the history of the past four years. We have 23 million people unemployed. Keeping with the status quo is not going to work for the American people.”

Obama returned to his oft-repeated theme of blaming George W. Bush, asserting the taxation approach Romney was proposing was nothing more than a return to the “trickle-down” economy of the Republican plan.

Obama began the debate by reciting familiar campaign themes, suggesting once again that his administration inherited from Bush one of the worst economies in the history of the United States.

But Romney struck a theme of energy independence and advancing small business as keys to getting the U.S. economy growing again. He accused Obama of proposing “trickle-down government,” represented by more government regulation and more taxation.

Romney disputed Obama’s assertion he was locked into a tax cut, charging that under the Obama administration the middle class has been pressed by reduced income, diminished job opportunities and increased food and energy costs.

From the first moments of the debate, Romney looked Obama directly in the eye, took exception to president’s assertions about Romney’s policies, and gave more precise answers.

Obama pressed that Romney’s economic plan called for $5 trillion in tax cuts and $2 trillion in military budget increases, a program Obama asserted would demand tax increases on middle-income earners.

“Look, I’ve got five boys and I’m used to somebody saying something that’s not true and hoping that by repeating it I’m going to believe it,” Romney countered, asserting that everything Obama said about his tax program was inaccurate.

Obama insisted Romney’s tax-reduction plan of necessity would either increase the deficit or demand tax increases for the middle class, charging that under Romney’s definition Donald Trump would be a small business.

Objecting to Jim Lehrer’s interruption that the first segment was exceeding the 15-minute limit, Romney charged that Obama would increase taxes on small businesses at the cost of 700,000 jobs.

As the discussion advanced to the nation’s deficit, Obama reiterated his statement that he inherited a massive deficit, and appeared on the defensive.

“You have been president for four years, you said you would cut the deficit in half and you have run $1 trillion in deficits each of the four years,” Romney attacked. “That does not get the job done.”

Romney pointed out that when the economy was growing as slowly as it is now, more slowly than when Obama took office, this is no time to increase taxes.

“You never balance the budget by increasing taxes,” Romney insisted. “I don’t want to go down the path of Spain.”

And:

Romney said “ignoring the 10th Amendment is not the way to have a vibrant economy.”

Romney said the key to education is great teachers, and he raised a reference to the U.S. Constitution regarding citizen rights.

“I interpret our founding documents as providing a responsibility for religious freedom – to pursue happiness by taking care of the less fortunate – but massive government involvement limits freedom – the path we are taking is not working with 23 million Americans unemployed and 50 million on food stamps.”

Obama said the responsibility of the federal government was important in improving the educational system in America.

“Budgets reflect choices. If we cut taxes to benefit people like Gov. Romney and me, it makes a difference,” Obama. He again demanded specifics of the GOP plans.

“When it comes to making college affordable, whether it be two years or four years, we cut out the middleman and eliminated banks from making a profit in student loans. Gov. Romney believes in education but he tells kids to borrow from their parents to go to college.”

Romney responded, “Mr. President, you are entitled to your own airplane and your own house – but not to your own facts.”

Romney said Obama put $90 billion into green jobs, but half of the recipients went bankrupt and others were owned by contributors to your campaign, and questioned the number of teachers that would have hired.

Romney proposed grading schools to know which were succeeding and which were failing.

“Massachusetts schools are ranked No. 1 in education because I care for education for all our children,” Romney said.

It was so bad that even gay activist and radical leftist Andrew Sullivan called it for Romney: (H/T Hot Air)

Look: you know how much I love the guy, and you know how much of a high information viewer I am, and I can see the logic of some of Obama’s meandering, weak, professorial arguments. But this was a disaster for the president for the key people he needs to reach, and his effete, wonkish lectures may have jolted a lot of independents into giving Romney a second look…

The person with authority on that stage was Romney – offered it by one of the lamest moderators ever, and seized with relish. This was Romney the salesman. And my gut tells me he sold a few voters on a change tonight. It’s beyond depressing. But it’s true.

A post-debate poll from left-wing CNN found that an astonishing 67% of registered voters thought that Romney won the debate.

Even the radically left-wing National Journal says:

Call it the curse of incumbency. Like many of his predecessors, President Obama fell victim Wednesday night to high expectations, a short fuse, and a hungry challenger.

If Republican presidential candidate Mitt Romney didn’t win the first of three presidential debates outright, he more than covered the spread. He was personable, funny, and relentlessly on the attack against a heavily favored Obama.

The president looked peeved and flat as he carried a conversation, for the first time in four years, with somebody telling him he’s wrong.

This debate was a blowout – and that’s just the reaction of the left.

Left-wing reactions on Twitter

Bill Maher: (HBO)

Bill Maher says Romney defeated Obama

Bill Maher says Romney defeated Obama

Peter Beinart (The New Republic)

Peter Beinart says Romney defeated Obama

Peter Beinart says Romney defeated Obama

Piers Morgan: (CNN)

Piers Morgan says Romney defeated Obama

Piers Morgan says Romney defeated Obama

And CHRIS MATTHEWS too:

Something else ran down his leg tonight, and it wasn’t a tingle, it was a tinkle.

Romney leading by 4 points in swing states

The latest poll of swings states from the left-wing Politico shows Romney leading Obama by 4 points, even with a 2 point oversampling of Democrats.

Breitbart explains: (links removed)

This week, Politico released its latest Battleground pollof the presidential race. Despite coming from the left-wing news site, the poll is one of my favorites. Its put together by respected pollsters from both parties, makes available its full cross-tabs and uses a very modest and reasonable turnout model for its sample. Including leaners, the sample in the poll is D+2. Nationally, Obama leads by 2-3 points, but, in the critical swing states, Romney now has the edge.

Each candidate leads in states considered “safe” for their party. In safe GOP states, Romney leads by 8. In safe Democrat states, Obama leads by a massive 22 points. But, in the more numerous and more important “toss up” states, Romney leads by 4, hitting the critical 50% threshold.

In the slightly different category of “battleground” states identified by Politico, Romney leads by 2, 49-47. Romney’s lead over Obama is powered primarily by his edge with independents. Romney leads Obama by 4 among the important swing voters. By 11 points, these voters think Romney would do better on the economy than Obama, 51-40.

Romney also has a big edge with middle class families, who prefer him over Obama by 15 points, 56-41.

My prediction for this election remains Romney 52, Obama 47.

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