Bill Frezza points out the ludicrous claims of the White House Council of Economic Advisers in “Saving a Million Jobs at $787,000 per Job”
More importantly he points out how completely unqualified such academics are to understand the realities of running businesses, creating jobs and providing real economic value for society.
“The White House Council of Economic Advisers is lead by three presidential appointees. Currently, these are Christina Romer, Austan Goolsbee, and Cecilia Rouse.”
“According to their biographies on the Council web site, these people have never held jobs outside of academia. Their positions at Princeton, Berkeley, and the University of Chicago were protected by lifetime tenure. Unemployment, to them, is a theory that cannot become a personal reality. What in their backgrounds makes them experts on the subject of job creation?”
“They never had to meet a payroll. They never had to raise money to fund their businesses from skeptical investors. They never bet their life savings on their own business judgment. They never had to scramble to pay off a banker who called in a loan. They never had to decide whether to take a calculated risk to expand their workforce hoping to take market share from a fierce competitor. They never had to make a judgment call on whether or not to launch an unproven new product. They never had to manage a reduction in force, explaining to employees that their jobs have been eliminated because the tax and regulatory burdens imposed by some new law forced them to cut costs. They never lost business to a government-subsidized competitor whose cost of capital was vastly lower than theirs. They never had to grease the palms of politicians offering constituent services to resolve a bureaucratic hangup caused by the labyrinthine government approvals these selfsame politicians inflict on many businesses. They never had to deal with a missed sales forecast caused by an economy so roiled by capricious and uncertain fiscal policy that frightened customers were holding back orders. They never had to deal with a key supplier that unexpectedly went bankrupt because their source of credit dried up as dollars got sucked out of the commercial economy into government debt. They never had to negotiate with angry landlords after being forced to shut down a business destroyed by spurious mass-manufactured class action lawsuits. They never had to stand up in front of disappointed investors to explain why they lost money that had been entrusted to them. And you can be sure that none of them ever fell on their face and had to pick themselves up, dust themselves off, and decide whether it was worth going through all of the joys described above to take another shot at building a business from scratch.”
Our government structure was set up by founders who presumed the country would be composed of a citizenry and governed by people who understand those fundamental realities of the entrepreneur that Frezza describes. In their day, essentially everyone with the right to vote lived the life of an entrepreneur. Perhaps our system just cannot work when the vast majority of our leaders of finance and government have no experience in real business and the experience of the citizenry in general is also largely sheltered from the economic realities of running a business.
It is such disconnection that allows our leading national economic advisers to either foolishly claim that encumbering our children by with $787,000 per job in long term debt to produce or “save” some near term jobs is in any way rational, or to cynically believe that making such a claim will be celebrated and appreciated by an unthinking citizenry.
And the stimulus bill is just a small fraction of the waste of our children’s future that the Treasury Department and Federal Reserve have squandered in the last year or so.