Job Creators Fighting Back

By John Stossel (Archive) · Wednesday, December 14, 2011

Some politicians claim that politicians create jobs.

Senate Majority Leader Harry Reid says, "My job is to create jobs."

What hubris! Government has no money of its own. All it does is take from some people and give to others. That may create some jobs, but only by leaving less money in the private sector for job creation.

Actually, it's worse than that. Since government commandeers scarce resources by force and doesn't have to peddle its so-called services on the market to consenting buyers, there's no feedback mechanism to indicate if those services are worth more to people than what they were forced to go without.

The only people who create real, sustainable jobs are in private businesses -- if they're unsubsidized.

Some CEOs are upset that people don't appreciate what they do. So they formed a group called the Job Creators Alliance.

Brad Anderson, former CEO of Best Buy, joined because he wants to counter the image of businesspeople as evil. When he was young, Anderson himself thought they were evil. But then he "stumbled into a business career" by going to work in a stereo store.

"I watched what happens in building a business. (My store,) The Sound of Music, which became Best Buy, was 11 years (old) before I made a dollar of profit."

In 36 years, he turned that store into a $50 billion company.

Tom Stemberg, founder of Staples, got involved with the Job Creators Alliance because he's annoyed that the government makes a tough job much tougher.

He complains that government mostly creates jobs -- that kill jobs.

"They're creating $300 million worth of jobs in the new consumer financial protection bureau," Stemberg said, "which I don't think is going to do much for productivity in America. We're creating all kinds of jobs trying to live up to Dodd-Frank ... and those jobs don't create much productivity.

Now, Stemberg runs a venture capital business. "I helped create over 100,000 jobs myself," he said. "Pinkberry and City Sports and J. McLaughlin are growing and adding employment."

To do that, he had to overcome hurdles placed in the way by government.

"All that we get is grief and more hoops to jump through and more forms to fill out and more regulations to comply with," complained Stemberg. "Fastest-growing investment segment in venture capitalism: compliance software."

Compliance is the big word in business today. Every business has to have a compliance department. But resources are scarce, so these departments suck away creativity. It's one reason that these successful businesspeople don't think they could do today what they did in the past.

Mike Whalen, CEO of Heart of America Group, said he got started with loans from banks that took a chance on an unknown: "It is not an underwriting standard that can be dictated by Dodd-Frank with 55 pages. It's kind of a gut instinct."

But John Allison, who built BB&T Corp. into the 12th biggest bank in America, says that "gut instinct" is now illegal.

"It would be very difficult to do what we did then today. It was semi-venture capital thing. The government regulations (today) are so tight, including setting credit standards, particularly since the so-called financial crisis and since they ... changed the credit standards in the banking industry, making it very hard for the banks to finance small businesses."

These successful businessmen realize that in one way, they profit from the regulatory burden. They can absorb the costs. That gives them an advantage over smaller competitors.

"Somebody who wants to compete with us can't because we can afford to hire the guys that can read this stuff and to keep us in compliance with the law. They can't," Anderson said.

Politicians rarely understand this. One who learned it too late was Sen. George McGovern. After he left office, he started a small bed-and-breakfast and hit the regulatory wall he helped create. Later, he wrote, "I wish during the years I was in public office I had this firsthand experience about the difficulties businesspeople face. ... We are choking off business opportunity."

Wish they learned that before leaving office.

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