When policies are enacted that cost businesses more money, such as “fees” or regulations, the business is not going to absorb that cost, they are going to pass that cost onto their consumers. What I don’t understand, is how some don’t understand that businesses are in business to make money, and that jobs are just a side affect of that. The purpose of business is NOT to do good in the community, it is to make money. All else that happens, good or bad with a business, is just a side effect of the goal….to turn a profit.
During the State of the Union address, which I am watching a day late, the Messiah spoke twice about punishing businesses to direct the market. The first time, he was speaking about punishing businesses that outsource jobs, and reward those that insource. While all that sounds superfantastical when you pontificate on a podium in front of a captive audience where you can make these bombastic claims, there is reality to contend with. The economic reality is that when this comes about, these companies that incorporate in the United States and have jobs outsourced elsewhere, they are going to leave the United States, and go somewhere like Ireland to set their sign out. That loss of capital is going to cause our economy to contract, as sure as I’m sitting here. The government (and this goes for the right or the left) cannot use the power of government to change the laws of economics. They might have more success if they tried to make the law of gravity illegal.
The second time the Messiah spoke, it was about trying to help responsible homeowners refinance their mortgages, by charging a “small fee” to the largest of financial institutions. The road to despotism is paved with liberal’s good intentions. These banks aren’t going to absorb this fee out of the goodness of their hearts. These banks are going to have the consumer absorb these costs, in the form of higher fees and fewer loans. This is going to have the same consequences as every other time the government oversteps their constitutional role and tries to fiddle with the economy. It’s not going to work. The unintended consequences are going to cause more harm than good. A good example of what will happen if this fee is charged is that the banks will raise the bar by which they measure creditworthiness, and some consumers who would benefit from being able to refinance a mortgage, will not be deemed worthy to refinance their mortgages.
I don’t understand the complete misunderstanding of how business operates. Business is in the business of making money. They are not in the business of being good corporate citizens, that is a side effect. Jobs are a side effect. The products and services, are a side effect. If businesses could set up shop, provide no product or service, no jobs, no good will in a community and still turn a profit, they would. There is nothing evil about turning a profit. Profit is not a dirty word. Private capital makes our economy what it is today. The lack of private capital conversely, causes our economy to contract, and lowers our standard of living. Businesses having more money allows them to invest more money. It allows them to grow more capital, and the cycle repeats itself. You can’t change the purpose of business, just because you want to. They want to make money, and they will do what it takes to keep that happening, whether it means pulling up stakes and moving elsewhere, or passing on regulatory fees to its consumers.
The sooner government understands how the private sector works, the better off this country will be.