My intelligence gets repeatedly insulted by OBONGRESSMEN (People in congress or the Obama Administration) stating that they have to create jobs. Here’s the first lesson OBONGRESS, government doesn’t create jobs in the big picture. Really? Yep, Government doesn’t create jobs. Here’s the hard economics and then I’ll get to the right way to create jobs.

There is an economic term called a “multiplier effect.” The multiplier effect is the efficacy of spending. It is the ability of spending to produce an effect on the economy, either growing it or shrinking it. Let’s assume the government spending multiplier effect is 1.0 (one). That means that an increase in one unit of government purchases, and thereby, in the aggregate, demand for goods would lead to an increase by one unit in real gross domestic product (GDP). Thus, the added public goods are essentially free to society. If the government buys another airplane or bridge, the economy’s total output expands by enough to create the airplane or bridge without requiring a cut in anyone’s consumption or investment. If the multiplier is greater than 1.0 as OBONGRESS tells us, then government spending creates more growth than the actual spending. That’s the multiplier effect. But we have a problem OBONGRESS, government spending has a multiplier effect of less than 1.0. Studies, focusing on World War II and the Viet Nam War, have shown that at best the multiplier effect is .8, less than one. This is probably higher than it actually is because war time shrinks the supply of labor so wages tend to rise and the unemployed become employed. A negative multiplier, which .8 is, is a bad thing. It means it costs us more as a nation to spend a dollar than a dollar. Spending shrinks the economy and OBONGRESS, here’s a hard fact, that’s what’s going on right now. Your spending is shrinking the economy. You’re spending is hurting the economy, that thing you claim to be so concerned about. Here’s a hard analysis. If OBONGRESS were right, why isn’t its spending growing the economy. Spend like a drunken sailor and grow the economy, right? Wrong, it doesn’t work. History proves it doesn’t work, over and over again. Damn that history. Governments, including ours, hate history. It’s such an irritation to their voluminous tripe.

But, and this is a big “BUT”, if OBONGRESS really cares about people, and really doesn’t just want to collapse the economy to mass produce need and thereby mass produce needy voters who vote for help, not change, then here’s what they’ve got to realize.

As stated, as history proves, government spending shrinks the economy and hurts people. Sure, if you get a nice government contract you make some money, but you make it at the expense of the economy. The dollar you make, costs the economic society more than a dollar. That’s the point. You also risk partaking in a downward spiral much like the one our nation is in presently.

So what do we do stimulate the economy? How do we create jobs? I will tell you soon. It’s been established that government doesn’t create jobs in the comprehensive national economy. Who does? The private sector. But why isn’t the private sector creating jobs? Because the private sector is cautious, it is financially conservative by nature. What does the private sector fear the most, what does money fear the most? Risk and Uncertainty, that’s what. What does the private sector do when faced with risk and uncertainty? It reduces risk, it tightens its belt. It doesn’t hire, doesn’t expend venture capital, doesn’t expand. It hangs on to what it has which is the smart and natural thing to do.

Right now, given the OBONGRESS agenda, which is creating debt at the greatest rate in history, what it is really creating is risk and uncertainty. It is scaring the hell out of the private sector. The private sector is terrified about the exploding national debt, looming regulation, looming increased taxes, government take overs of industry, cap and trade legislation, and based on my analysis, everything OBONGRESS is doing or proposing. So, based on the private sector’s fear, they have and will continue to tighten their belts, avoid risk, and avoid expansion. So as long as OBONGRESS presses on with its agenda, it will shrink the economy. Econ 101, there it is.

Now, here’s the solution. If OBONGRESS really wanted to create jobs, really wanted to grow the economy, then here’s what it needs to do. Eliminate risk and uncertainty, that’s what.

It doesn’t take a rocket scientist to realize that if the private sector were confident that the dollar would hold its value, the government wouldn’t explode, taxes wouldn’t explode, the cost of employment wasn’t going to sky rocket, and regulation would be reduced, the private sector would take risks. The private sector would chance into new innovative projects with new products, new ideas, and most importantly, new jobs. And here’s a somewhat important point; the private sector has a positive multiplier effect. That means that when McDonald’s, the franchise or some family named McDonald, ventures out and spends money, it grows the economy more than a dollar for every dollar they spend or invest in a venture.

This economic analysis isn’t unknown, it is basic. It is well known. And yet, OBONGRESS ignores it. As a side note, OBONGRESS claims they saved the auto industry and the banking industry. Really? Sort of, is the answer. Yes there are banks in existence and auto manufactures in business that wouldn’t be if the government hadn’t stepped in. But, the overall cost to our economic society to save these companies is greater than the benefit. If you’re an auto worker you receive a benefit. The rest of our economic society receives a detriment greater than the benefit received by the auto worker. Evidently, OBONGRESS doesn’t just want to redistribute the wealth, they also want to redistribute the suffering.

So OBONGRESS, take a look at history, read up on economics, and do the right thing. Give the private sector a climate without uncertainty and risk. Let the private sector keep what it earns and believe it will continue to keep what it earns in the future rather than having it be expropriated by a drunken OBONGRESS, because that fear, that fear that our government is a growing cancer, shuts down the private sector. It hurts folks, hurts them bad.

One more note, for my entire business life, the biggest bill I’ve ever had to pay is the bill to the government. It has never been an insurance premium. It has never been health care. It has always been you government. And that bill, that I pay monthly, limits what I can spend with a positive multiplier effect. So do the right thing, and give us hard working Americans our confidence back. Let us believe that the cancerous government is going to stop growing. If you do, you’ll get your jobs and you’ll get to take credit for creating them, a minor league lie by your standards, but I’ll let you run with it.

That’s my Reetzality for the Day.

Thanks for the read.

Brett Reetz

Note: Here’s a link which I took my multiplier effect lanaguage from. A good article by Robert J. Barro. http://online.wsj.com/article/SB123258618204604599.html

Second Note: Thank God for Massachusetts. A second revolution has begun. It might have started in Virginia and New Jersey actually.