Wednesday, February 3, 2010

The Line Between Us

In his State of the Union address, President Obama has perfectly defined the Administration’s approach to the current economic situation. The primary proposal is to provide businesses a financial incentive to hire additional employees. No statement could more clearly delineate the difference between a government solution and a market based one. The Administration seems to believe that it would make sense for a business to hire a worker to obtain a $5,000 government grant. That would only be true if the worker made less than $5,000 and the government subsidy continued for as long as the employment.

In the real world, businesses hire more people when more people are needed to make/sell more product to meet demand or to expand markets. As Steve Martin discovered in The Jerk, “It’s a profit deal”. Hiring someone that is not necessary is something only a government would do and only people completely ignorant of the how businesses operate could possibly think would work.

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