Tuesday, October 05, 2010

More questions . . .

. . . a possible answer

In a post on 29 SEP, titled Good Questions, I quoted Patrick J. Buchanan, to wit:

In 2009, as unemployment soared under Obama, the U.S. government issued 1.131 million green cards. . .

In response, Brennig offered a riposte with several questions that focused on a central point. That point (hopefully accurately restated) being that "accepted economic thinking clearly states that change in economic policies . . . can take up to 18 months to take effect," so why blame Obama?

That was such an insightful question that I decided to bring my answer here rather than just in a comment to his comment. Here 'tis, slightly expanded - and corrected, because I misspoke with respect to taxes.

As former COO of a small business, I know first-hand that there are both resultant AND anticipatory effects created due to a significant policy change.

A good percentage of the business leaders in the U.S. understand (or, at least believe they understand) the eventual outcome of Obama's overtly socialistic policies. Then they react in accordance. They anticipate the probable effect of these policies, then adjust their business strategies and practices so as not to be adversely affected when the excrement strikes the rotary air mover.

For example, the expiration of the Bush tax reductions on "the rich" is particularly onerous to small businesses. Many of these are "Type S" corporations, where the entire profit of the company is treated as taxable personal income to the owner, regardless of the salary he pays himself.

So, a significant income stream that could be used to create jobs is sucked up by the government. Business owners anticipate this effect and adjust to it before the fact.

His policies are generally anti-business, the owners know it, so they are not waiting those projected 18 months. A successful business must lead the parade, not sweep up after it with a dustpan and broom.