The Kuppy Plan (How To Fix Unemployment)

August 9, 2010 9:50 PM


Dear President Obama,

Back in March, I wrote to you with my Kuppy Plan for the housing market. After yet another dismal jobs number, I thought it was time for a Kuppy Plan for unemployment.

Clearly our country is in a tough spot.  We compete in a world economy. Jobs gravitate to places which offer the lowest costs of doing business. There are places where workers are paid a bowl of rice a day. We may no longer be competitive in certain activities, but that should not preclude us from trying. Silly regulations and high taxes mean that America is no longer a preferred place for multinationals to do business. We will not have job growth until we fix this.

The Hippocratic Oath of governance should imply that your first duty is to do no harm. This health care regulation is bad enough. Now you are scaring businesses with talk of higher taxes and increased regulations. Are you serious about this carbon tax stuff? Do you think China cares about carbon? They can’t even see the sun in Beijing because of all the pollution. Are you trying to destroy what’s left of our economy? That whole BP ‘shakedown’ thing may have played well with certain voters, but how do you think it looks for foreigners wanting to do business here? If you want to create more jobs, you need to create an environment where companies want to invest in the future. For decades, we have repeatedly persuaded companies to move work overseas. Your policies seem to only accelerate that trend.

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In general, government intervention in any activity makes that activity less efficient and more expensive. There are those who think government solutions can fix our labor problems. Maybe our labor problems are the result of too many ‘government solutions.’

There is this fellow, FDR, whom you seem to idolize. Upon taking office, he faced the same problems that you do. I see the similarities. He chose to tinker with the economy and ended up turning a bad credit liquidation into a decade long depression. He put the ‘great’ in great depression. Please don’t repeat his mistakes.

There are those who claim that FDR fixed the depression. They will suggest that we create ‘job programs.’ They will point to the supposed success of FDR’s alphabet soup of make work programs. They will point to regulations that supposedly tamed the vicious forces of capitalism. They think that if you plant enough trees and give enough rousing fire-side chats, you can miraculously cure our economy. Please ignore their siren call.

There are those who feel that FDR’s programs neither helped nor harmed the economy. Rather, they were a patch to hold things together, until World War II somehow rescued us from the depression. How can government spending on bombs make people want to buy new cars? You must be smart enough to see through that ruse. The war did not cure the economy.

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Here’s my view on the depression. I’ll be blunt. The economy only revived when FDR finally died. When he was no longer able to tinker with things, the economy was again freed to do what it would naturally do. When the war ended, Truman wanted to continue with Roosevelt’s idiotic schemes. Fortunately, our congress had enough of these policies—our economy has never looked back.

I speak with the management teams of small businesses daily. These are rapidly growing companies—the bedrock of our economy. Normally, they are hiring. Now, they’re not so sure. No one wants to hire and train people only to let them go a few months from now. Entrepreneurs can cope with business cycles. An uncertain regulatory environment scares companies into inactivity.

No one wants to risk capital on growth only to see income taxes rapidly increase. Why take risks without reward? Your administration is mostly made up of academic types who have minimal real world experience. Trust me; this is how it works in real life. I talk to these CEOs all day long. I am the owner of a small business myself. No one is hiring. We are scared of a government gone mad. 

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It doesn’t have to be this way. You still have over two years left to your presidency. You can still go down as one of our country’s greatest presidents. Here’s what you need to do:

  1. Stop bailing stuff out. Stop interfering with the normal liquidation of malinvestment. Stop playing with the money supply. Let the free market do what it will do.
  2. Institute some version of a flat tax that gets rid of all the special deals that various industries now enjoy. Use the revenue increase to lower the income tax rate for everyone.  
  3. Institute term limits for all senators and congressmen. Our founders never intended for governance to be a career decision. It was meant for successful individuals to practice after they retired from their real jobs. If politicians stopped focusing on getting re-elected, they’d be less concerned with offending voter groups and instead focused on making the hard decisions our country currently needs.
  4. Clean up the tort system. Frivolous lawsuits are adding to the cost structure of every company in America and are directly responsible for companies refusing to do business in this country.
  5. Stop scaring businesses with new laws and new taxes. Instead, focus on making America the low cost and preferred place to do business. If you offer businesses a higher return on capital, they’ll have more money to invest in growth and job creation.

I’ll admit some of these points may be unpopular. Some of them will be difficult to implement. Great leaders look out for the long term—even at the risk of re-election. Both parties are to blame for the crisis we face. This is your chance to fix things.

President Obama, it’s not too late to be a hero.

Sincerely,

Kuppy

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