Why the Private Sector Isn’t Doing Fine (Hint: It’s not lack of government created “demand.”)

Attached is an excellent article by Michael Tanner at the National Review which explains why it is that businesses are reticent to expand these days.

Government is too big.

He cites a study from the University of Paris (of all places) which showed that in 17 countries between 1960 and 2000, as the welfare state came into full bloom,  1.5 private sector jobs were destroyed for every new government job.

Tanner also discusses how Obamacare is going to pound small business. Hire a 50th full time employee and suddenly the business owner is on the hook for health care at an average cost of over $4,000 per year.

The other option is a fine of $2,000 per employee per year.

So just as a company starts to transition from small to mid-sized business it will hit this regulatory wall. Tanner predicts that many companies will just choose to top out at 49 employees.

Add the massive amount of public debt which looms over this country, the public pension obligations which are stupefying in their shortfalls (see our prior post), and Dodd-Frank coming down the line, and one can see that the private sector is not doing fine, and things are likely to get worse. This is not environment which encourages growth.

Click here for the article.