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  1. #111
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    The USA has no where near either of those things at present, so we have working room.

    Also, wasn't our greatest period of productivity also combined with the most regulation and the highest income taxes?
    Forgive the word wall:

    Here's Why Small Business Isn't Hiring, And Won't Be Hiring
    Charles Hugh Smith
    http://www.businessinsider.com/heres...-hiring-2011-7

    The reasons why small businesses aren't hiring are structural; the dearth of jobs is not temporary, and this is not a "soft patch," it is quicksand.

    The low job growth in the U.S. isn't a "soft patch," it's a sea of quicksand. In a nutshell, here's the situation: 2/3 or more of all job growth comes from small businesses starting up and expanding; only a third or less of new jobs come from Corporate America or government expansion.

    As recent reports have shown, Corporate America has been on a hiring spree--overseas. From the point of view of globalized Corporate America, why hire anyone in a slow-growth market like the U.S.? It makes sense to hire new employees in fast-growing markets where the corporation is reaping its growth and most of its profits.

    As for government hiring: the game of expansion based on explosively rising debt or Federal stimulus spending is over. To live within their means, local goverment and related agencies will have to shed jobs, as labor accounts for 80% of government expenses.

    That leaves any future expansion of jobs up to small business. But small business isn't hiring, and won't be hiring, for these structural reasons:

    1. The high costs of cartel healthcare, a.k.a. Sickcare in the U.S. Corporate America and small business share one millstone: the absurdly high costs of healthcare in the U.S., which have been pushed onto the employers more as a historical accident than out of rational policy.

    I have analyzed sickcare in depth, ( for example,http://www.oftwominds.com/blogmar11/...pt-US3-11.html ) and it all boils down to this: we spend twice as much per capita on healthcare as our developed-economy competitors. Countries from France to Australia to Japan (three different systems) spend about 8% of their GDP on healthcare, and the U.S. spends 18% (17.6% in 2009, and of course sickcare costs leap up every year regardless of who's in office).

    Here is a report worth studying: http://nihcm.org/images/stories/NIHC...rief-Email.pdf 5 percent of the population is responsible for almost 50 percent of all healthcare spending. At the other end, half of the population accounts for just 3 percent of spending.

    That 8% of "extra" money our nation squanders on paperwork, fraud, profiteering, needless procedures, useless drugs, $250,000 spent on the last few months of very ill patients' lives and all the rest of the insane sickcare system comes to $1.25 trillion. That is a "tax" on the economy which is paid mostly by employers, the self-employed and taxpayers via the monumental waste in Medicare and Medicaid.

    The vast majority of small businesses are marginal, and they cannot afford to hire employees when the already crushing costs of healthcare continue rising. The healthcare insurance for an employee with a family can easily exceed $1,000 per month, and more if the worker is over 50. Add in workers comp insurance, disability and unemployment insurance, and the employer's share of Social Security and Medicare (7.65%) and the "overhead" costs for hiring a new worker can equal or exceed the employee's salary.

    2. Politicos and employees don't understand small business. How many politicos started a business from scratch and are still running a small business of 25 or fewer employees? Basically none. How many employees understand what it feels like to be skating close to the edge of emotional and financial collapse, month after month?

    Employees wonder why their pay isn't rising, but the employer's compensation costs have been steadily climbing for decades thanks to sickcare and other systemic costs. As I have often said here: you'd have to be literally insane to hire anyone in this economy unless that employee will pull in so much new business that the costs are justified. Unfortunately, that is a rare circumstance.

    Out-of-touch politicos think that trimming the employer's share of FICA (Social Security) 2% is going to make a measurable difference in a 100% labor overhead (i.e. you hire a worker at $2,000 per month and the overhead costs $2,000 per month)--what a joke. Great, my overhead per employee dropped to 98% from 100% while my sickcare insurance leaps by 10% a year.

    3. Local government views small business as tax donkeys. Local government sees small business as one thing and one thing only: a captive source of extra revenue via higher licensing fees, junk fees, permits, surcharges, etc. Local government thinks small business is captive, but the local politicos and fiefdoms are forgetting every small business owner has an option: it's called closing down, and opting out of the rat-race of higher taxes and costs.

    Many oftwominds.com readers are small business owners who have bailed out, sold out or closed their enterprises: it was no longer worth the headaches, hassles and risks.

    4. Litigation nation. Employees and others can take a turn at the lawsuit lottery wheel, and if they "win" then you lose. The stress alone is deadly. I know many employees think the owner is exploiting them, and that is a reality for undocumented workers and others. But the number of business owners who are trying to do right by their workers far exceeds the exploiters.

    Meanwhile, the cost of "protection" against lawsuits keeps rising, too.

    5. The "flexible, free-lance/ independent contractor" model of employment which has been lauded for the past decade as the key to America's rising productivity has some serious downsides--and I should know, as I've been a free-lancer for 20 years.

    The basic "innovation" here is to offload that 100% overhead expense onto the employee via paying them more as an independent contractor or free-lancer. But that model has numerous structural weaknesses.

    -- I.C.s (independent contractor) don't qualify for unemployment, so when they lose steady work there is no backup income. There is no 6 or 9 months' grace period where the free-lancer can work on Plan B--they're relying on savings the moment they cash their last paycheck.

    -- We free-lancers pay our own taxes quarterly. Once your income drops then it's dangerously tempting to short-change that next quarterly payment or skip it entirely. Yes, you will owe less because you're making less money, but those with formal jobs don't realize we all pay 15% FICA (self-employed Social Security) on every dollar earned. Toss in state and Federal income taxes and even supposedly low rates (15% Federal, etc.) quickly add up to 35% or more. That means big tax payments, and big tax problems if you fall behind.

    -- Free-lancers' income can drop sharply but that won't be reflected in any employment statistic; it will only show up in declining tax revenues.

    -- Laying off I.C.s and free-lancers is the low-hanging fruit for enterprises cutting back. Based on what I've read and heard, most of these initial "easy" cuts to head count have already been made. So the next wave of lay-offs will be formal employees.

    -- The number of I.C.s and free-lancers in the U.S. economy is simply enormous-- semi-official estimates put the number at 10 million but I would guesstimate the real number is more like double that: 20 million, or about 15% of the entire U.S. workforce of 139 million.

    Many of these are facing zero income, others are scraping by with a few temp gigs and favors from old employers. None show up in official statistics. So when you read that 14 million people are officially unemployed, add in 14 million under-employed (barely scraping by) or totally unemployed I.C.s and free-lancers.

    --- Many of the industries which supported I.C.s and free-lancers have been reduced to mere shadows of their former glories, and they won't be coming back. The print media industry supported tens of thousands of free-lance writers, editors, marketing types, ad agency temps, etc.--that industry is toast. The "creative" industries like music and film have also suffered huge cutbacks; as the Web has creatively destroyed income streams, then the number of jobs those industries can support shrinks dramatically.

    -- "Consulting" is now a synonym for unemployment. Enterprises and government agencies which handed out consulting contracts like candy at Holloween in the good times have slashed consulting contracts to the bone. Many of these consultants had grown accustomed to pulling down $200,000 or more a year; with their incomes now essentially zero, that's a lot of business-class airline seats and fancy restaurant meals which will now go begging.

    -- As regular employees get laid off, some will join the already overflowing ranks of I.C.s and free-lancers in the hope that they can transport their skills and contacts into a free-lance income. Some will, but most will be disappointed; principals are trying to maintain their own income and the only way to do so is not hire and not subcontract out any labor except what is absolutely necessary.

    Conclusion: do't expect small business or independent contractors to create new jobs--they're trying just to hang on to whatever they have, not expand headcount.

  2. #112
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    Part II

    Small Business, Big Regulatory Burden
    By Scott Shane
    http://www.american.com/archive/2011...ulatory-burden

    President Obama recently acknowledged the burden placed on enterprise. But does he know how large that burden is?

    A synonym for “legislator” illustrates the problem many small business owners have with the government today. That word is “lawmaker.” Making laws is what many small business owners see as so problematic with Washington.

    Small business owners are increasingly saddled with regulatory compliance, a burden that hinders the productivity of their economic sector. And they are beginning to push back against the tide of rules coming from Washington.

    To President Obama’s credit, he appears to be listening. In an opinion piece in the Wall Street Journal on Tuesday, President Obama wrote, “Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs.”

    Adhering to government rules is costly for businesses. Two Lafayette University economists, Nicole and Mark Crain, calculated that adhering to federal regulations alone cost $1.75 trillion in 2008, more than $15,000 per household. And business, as Crain and Crain explain, pays 55 percent of these costs.

    The regulatory burden is particularly heavy on small business. Crain and Crain calculated that adhering to federal rules cost $10,585 per worker for businesses with 19 or fewer workers, but only 78 percent of that amount for businesses with 500-plus workers.

    For some types of regulation, the gap between big and small firms in the compliance burden is even larger. Crain and Crain’s analysis shows that the per-employee cost of compliance with tax laws is $1,584 for businesses with 19 or fewer workers, but only $517 per worker for companies with 500-plus workers. For compliance with environmental regulations, the difference is a massive $4,101 for businesses with 19 or fewer workers and $883 per worker for companies with 500-plus workers.

    Regulation is more of a burden for small companies than for large ones. Because much of the expense of adhering to governmental rules is the same regardless of business size, regulatory compliance has a high fixed cost and a low marginal cost. Big companies can spread the fixed cost across more revenue and employment than small companies. This, as any student of economics will tell you, is a classic example of economies of scale.

    Not only is small business’s regulatory burden disproportionately large, it has also gotten heavier in recent years. The figure below shows what small businesses pay per employee to adhere to federal rules increased more than 21 percent in real terms between 2004 and 2008.


    Small business owners have noticed this increased cost of regulation and increasingly see it as a problem. Back in 1986, the members of the National Federation of Independent Businesses reported that “unreasonable governmental regulations” was only the 22nd most important problem small business owners faced. In 2008, they said it was sixth.

    What can we do about this increasingly heavy compliance burden on small business owners? Some observers believe that putting more heft behind the Regulatory Flexibility Act—a law that makes it mandatory for government agencies to examine the impact of new regulations on small businesses before they implement those rules—would alleviate the regulatory burden on small business. Advocates of this position claim that pushing government agencies to more carefully examine the costs of regulation to small companies would convince the federal bureaucracy to cut back on such regulations. The president seems to agree. In his opinion piece, he said, “Today I am directing federal agencies to do more to account for—and reduce—the burdens regulations may place on small businesses.”

    While this is a start, it is not enough. Simply knowing that regulation imposes weight on small business owners will do little to get the bureaucracy to cut such regulation. Policy makers in most government agencies already know that small business faces a heavy and increasing regulatory burden.

    Moreover, much of the regulatory burden is coming not from the bureaucracy but directly from Congress in the form of laws like the healthcare and financial reform legislation. If we are to lift the burden of regulation from small business, we need Congress to stop over-regulating small companies. A first step toward this goal would be for those in Congress to pledge not to increase the regulatory burden on small business and to commit to cutting it back by a fixed amount—at a minimum, by the amount that burden has increased in recent years.

    The outcome of the recent midterm election suggests that Congress might just do that. Many small business owners threw their support behind the Tea Party because it aims to change the term “lawmaker” into “law repealer.” Anti-regulation pressure that the Tea Party is exerting on Congress might reduce the regulatory burden on small business back to an acceptable level.

    Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.
    We are over regulated.

    Employers are afraid to hire because they don't know how much the employee overhead is going to be due the uncertain nature of current business legislation.

    Our country's success in the past can be attributed in no small part to it's ability to out innovate it's competitors.

    With current regulations stifling the growth of small business in the US, our country is beginning to lose one of it's primary drivers of economic growth (that being innovation).

  3. #113
    ^He pronks, too! Magic Poriferan's Avatar
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    Quote Originally Posted by DiscoBiscuit View Post

    We are over regulated.

    Employers are afraid to hire because they don't know how much the employee overhead is going to be due the uncertain nature of current business legislation.

    Our country's success in the past can be attributed in no small part to it's ability to out innovate it's competitors.

    With current regulations stifling the growth of small business in the US, our country is beginning to lose one of it's primary drivers of economic growth (that being innovation).
    There's more I could potentially respond to in all of that than I care to. But there's a question that can probably be seen coming from a while away.

    Why are nations that are more committed to policies that we can hear deduce are counter-innovative as successful as they are? I gave a cursory read of that piece. Perhaps you can draw my attention to it, but I did not see a part where it explained how a country with generally less business regulation and lower taxes than the rest of the developed nations(and many of the developing nations) world is suffering innovation destruction from those policies more damaging than any of those other countries.

    One thing that is curious was all the emphasis you put on the health care expenses, since they are (as was even noted) much lower in countries with universal health care, a rather broad kind of regulation.
    Go to sleep, iguana.


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  4. #114
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    Why are nations that are more committed to policies that we can hear deduce are counter-innovative as successful as they are?
    Because other countries have different strengths than we do.

    You can't really just put two countries side by side and say, well X works for them, and they avoid problem Y, we should be able be able to do the same thing.

    Other countries have completely different legislative foundations that, more than likely allowed their health care system to develop organically. As such, their system's natural genesis allows each and every part of it to be tried and tested (to a greater or lesser degree) in the market. Thus, at each step of their systems development, it's current iteration was subjected to market forces which forced and evolution that allows the finished product we currently see to function more efficiently than a similar system would in our country.

    Put another way, other country's health care systems were allowed to go from A to B to C to D and so on and so forth until it reached M. That evolution at each step of it's development allows for a more efficient finished product.

    Implementing universal health care here is like forcing that same process to go from A to M without all the little steps in between, which results in a much poorer finished product.

    Not to mention that the economies in each country are vastly different, meaning that even if we had the time to take all the intermediary steps the finished product still may ill suit our nation.

    It would be like trying to go from A to M, except we use the Cyrillic alphabet instead of our regular alphabet.

  5. #115
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    Quote Originally Posted by Magic Poriferan View Post
    The USA has no where near either of those things at present, so we have working room.

    Also, wasn't our greatest period of productivity also combined with the most regulation and the highest income taxes?
    Wasn't that during a time in which Europe and Japan were rebuilding massive war damage, and the 'third world' was much much less developed? You are mistaking correlation with causation-the United States could get away with stuff then that it cannot get away with now; its much easier to move production elsewhere in a modern, globalized economy.

  6. #116
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    Quote Originally Posted by DiscoBiscuit View Post
    We are over regulated.
    Subjective estimation, and one that doesn't make my life any easier.

    Employers are afraid to hire because they don't know how much the employee overhead is going to be due the uncertain nature of current business legislation.
    Never mind that they can't get any of the banks to grant them lines of credit to cover that overhead while they expand and innovate.

    Our country's success in the past can be attributed in no small part to it's ability to out innovate it's competitors.
    That ability, of course, coming from our ease of access to inexpensive raw materials, once the necessary technology (i.e. the railroad) came about.

    With current regulations stifling the growth of small business in the US, our country is beginning to lose one of it's primary drivers of economic growth (that being innovation).
    The regulations that stifle the growth of small business exist mainly on the state and municipal level, set into place by the huge businesses who want there to be as many barriers to entry for competitors as possible. It's not the loss of innovation that's the problem - it's the establishment of a class of rentiers who play little more than a vastly parasitic role on society. Small business still has innovation - innovation's an innate characteristic of humanity. It's just that big business is doing everything it can to make sure that small business is dead and buried.

    Quote Originally Posted by DiscoBiscuit View Post
    Because other countries have different strengths than we do.
    What, then, are America's strengths? Is it our capacity to innovate so that we make more money, or is it the capacity to innovate so that human lives are made less miserable?

    You can't really just put two countries side by side and say, well X works for them, and they avoid problem Y, we should be able be able to do the same thing.
    Sure you can. It's just that there's a lot of people out there who don't want to avoid problem Y, because problem Y makes them rich and powerful. There's also a bunch of people who don't want to give up perceived benefit Z at the same time.

    Other countries have completely different legislative foundations that, more than likely allowed their health care system to develop organically. As such, their system's natural genesis allows each and every part of it to be tried and tested (to a greater or lesser degree) in the market. Thus, at each step of their systems development, it's current iteration was subjected to market forces which forced and evolution that allows the finished product we currently see to function more efficiently than a similar system would in our country.
    Except, that's not how it happened whatsoever. Outside of English-speaking countries, you're operating in civil law systems. Civil law systems don't let things happen organically, for the most part, as the whole point is that it's supposed to be a rationalized system. Things weren't tried and tested; the legislature said that this is how things are going to be, and society adjusted to it. We do not have such a system in the United States because Congress does not have that power.

    Put another way, other country's health care systems were allowed to go from A to B to C to D and so on and so forth until it reached M. That evolution at each step of it's development allows for a more efficient finished product.
    That's just not how it happened. In most countries, it truly consisted of academics, policymakers and other interested parties sitting down at a table, agreeing that it would be done, and discussing how it would be done. They did this, because after two World Wars and decimated generations, people were sick and tired of their shit. Truman didn't have that luxury for his national health care plan.

    Implementing universal health care here is like forcing that same process to go from A to M without all the little steps in between, which results in a much poorer finished product.
    Except that it's not. It's more like establishing goals beyond the profit motive.

    Not to mention that the economies in each country are vastly different, meaning that even if we had the time to take all the intermediary steps the finished product still may ill suit our nation.
    What's more important? A country's economy, or the health of its people? Are we really just commodities to be used and then thrown out?

    It would be like trying to go from A to M, except we use the Cyrillic alphabet instead of our regular alphabet.
    There is no M. There is only the new reality, and how we adapt to it.

  7. #117
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    Well, looks like we won't be agreeing on this anytime soon.

    [YOUTUBE="praFGD51ih8"]Big gulps huh[/YOUTUBE]

    Welp... see ya later.

  8. #118
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    Default A Handbag Away from Our Debt Ceiling by Tim Hartford

    “Mum?”

    “Yes, dear?”

    “What do you and Dad keep arguing about late at night?”

    “You should be asleep. When Daddy and I have our little chats, it’s past your bedtime.”

    “Mum, I’m 15 – a bit old for bedtime. Anyway, I usually ignore your arguments but this one seems important.”

    “Well, it is important. We are debating whether to raise the family’s debt ceiling.”

    “Debt ceiling?”

    “It’s the limit on what we can borrow.”

    “Doesn’t the bank manager decide that?”

    “Yes, ultimately Mr Foss-Smythe can refuse to lend money to us. But your father and I have a different system. For years and years, we’ve taken a solemn vow never to let our household borrowing exceed £500 without both of us explicitly agreeing to raise the limit.”

    “So you were arguing about whether to borrow more than £500?”

    “Darling, we’ve already borrowed £500,000. Houses aren’t cheap these days, even in Hackney. The point is that your father and I agreed each time we needed to raise the debt ceiling. But now we can’t agree. Your father wants me to cut back on my spending, or he won’t agree.”

    “So, what happens if he doesn’t agree?”

    “Then we have to ensure that our household debt doesn’t go over £500,000.”

    “Fine. £500,000 is a lot of money. Dad has a point. You buy too many handbags.”

    “But darling, the handbags aren’t the point here!”

    “Aren’t they?”

    “Well, perhaps they are a bit. But even if I did stop buying handbags, we’d still go over the limit. Look – ever since I lost my job I’ve been looking for a new one. I’m sure it’s just a matter of time. But until then our income is depleted.”

    “So – stop buying handbags, Mum!”

    “It’s not that easy. The percentage of household income spent on handbags has been considerably exaggerated by your weaselly father. Far more important is the mortgage. If we stop the payments, we lose the house.”

    “But you’re not actually borrowing more money to pay the mortgage, are you?”

    “Actually, we are. We’re taking out loans and using credit cards to pay the mortgage. There are also the payments on the car, your school fees and the money we promised to send every month to Grandma.

    “And then there’s stuff like food and electricity – we haven’t promised anybody that we’ll spend that money but life would get pretty difficult if we didn’t. Without my salary, our spending is inevitably higher than our income.”

    “Wow. So Dad wants us to do something really drastic?”

    “Well – no, not really. He’s just using the debt ceiling as a bargaining chip. We agreed all of this spending and set out the whole budget a few months ago.”

    “Was that before you lost your job?”

    “No, that was after.”

    “Mum, I’m confused. You and Dad knew what your income was going to be and you agreed all the spending. So, basically, you agreed spending that would guarantee that you’d break through the debt ceiling. So you’ve agreed to exceed the debt ceiling.”

    “Yes – we agreed to exceed the debt ceiling. But we haven’t agreed to raise it. That’s the problem.”

    “But that doesn’t make any sense!”

    “It doesn’t matter that it doesn’t make any sense. The point is he has bargaining power now.

    “The next mortgage payment is due on August 2; that’s also the same day we send money to Grandma. If he hasn’t specifically approved for us to go overdrawn on our joint account, we have to choose: Grandma doesn’t get paid, or we go hungry, or we skip the mortgage payment.”

    “But you have the overdraft limit?”

    “Oh yes. In fact we have the overdraft limit agreed with Mr Foss-Smythe. The same bank we have the mortgage with.”

    “And he’s happy to lend you the money?”

    “Delighted, darling.”

    “So he’ll be happy if you borrow money from your current account to pay the mortgage, but not if you just skip the mortgage.”

    “Exactly. He will be very unhappy. I’m surprised he’s not more nervous already.”

    “Perhaps he should be more nervous that you don’t have a job and that you and Dad are spending far more than you earn, than about some entirely arbitrary debt ceiling that the two of you can agree to waive at any moment?”

    “You may be right.”

    “Where is Dad, anyway?”

    “I think he’s buying himself a treat to relieve the stress.”

    Quote Originally Posted by InvisibleJim
    Governments should run their internal economies like I run my household internal economy, only get debt for a mortgage, not even to buy a car, income always greater than expenditure.

  9. #119
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    Let's add to the story.

    "Mum, why don't you charge a fee from your rich clients, like you do with everyone else? "

    "Because they complain a lot and they're loud. They even have many of my regular clients up in arms over the suggestion. They threatened to stop doing business with me."

    "But where would they go? No one else is willing to work for free.

    "Good point. But your dad would get upset. He's best friends with those people. He parties with them weekly. I think they sip tea"

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