Tuesday, February 16, 2010

Government's Good Intentions

Hot Air notes that Obama is borrowing Jimmy Carter's jobs bill:
This bill has the same structural problems as Carter’s, which is that it targets a business decision on which it will have little influence. No business will hire someone and pay them $106,000 to get $6000 back in only one year without additional demand to support the $106,000 salary...

The effect of a tax benefit will be to further subsidize the already successful and to put struggling businesses at a greater disadvantage. If two entities in a market already have a competitive mismatch, the hiring tax credit will aggravate it by allowing the better business to slightly reduce costs while bringing more forces and product to market. That will allow them to lower prices (or not hike them) more readily than their competitors, which would create a government-induced bias that could drown the disadvantaged entity.
In order to have companies that are "Too Big to Fail" you have to foster them along the way.

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