Economic growth a must

Opinion

May 9, 2012

Economic growth a must

HARPING

FOR THE DAILY SOUTHERNER Bob Harper The Daily Southerner Wed May 09, 2012, 05:21 PM EDT

TARBORO — I give credit to Rich Karlgaard, a regular contributor to Forbes magazine, for many of the statistics I use in this column.

As we all know our economy is extremely sluggish to put it mildly. It’s just growing at somewhere between 1 percent and 2 percent and at this rate the economy can only get worse. In comparison, our economy has grown, on average, at a rate of 3.3 percent since the end of World War II. And even during this time frame we had two big recessions.

To achieve an average growth average of 3.3 percent we must have a number of years when the economy grows at a much higher rate that this. Actually when the U.S. is not in a recession the national growth rate grows at a rate of 4 percent. If our growth rate rose from its current rate of 2 percent, or less, new jobs would grow tremendously.

The administration often mentions the need for fairness, but rarely says anything about the need for growth. Growth would automatically bring fairness. If we stay around a 2 percent growth rate we will see debts rise, a continuation of high jobless rates and bad politics.

History shows that when government spending rises above 20 percent of GDP (Gross Domestic Product) our growth rate will diminish greatly. Spending reached 21 percent of GDP by the end of 2008 and now stands at 24 percent of GDP. That’s what excessive government spending will get us. If spending dropped to 18 percent of GDP, 4 percent growth should return.

Another area where attention needs to be paid is employment for blue-collar workers. The big anti-fossil fuel mindset in Washington has cost a lot of jobs in manufacturing, construction and mining. Good paid blue-collar jobs are diminishing at a rapid rate. But, some say what we need is more electric cars; ignoring the fact that coal supplies over 40 percent of America’s electricity.

There’s no question that we need to start growing and creating more jobs in every area. We don’t need more government spending to create more government jobs for the private sector taxpayer to pay for. We do need to start cutting unneeded government jobs through attrition while getting rid of so many duplicating government programs.

The administration makes a lot of noise about the need to help small business while taking the stance that big business is some kind of evil function.

Of course we need small businesses to thrive and they are the largest employers in the country. But, it’s also true that large businesses employ a large number of workers, too, and that a tremendous number of small businesses are dependant on large businesses in order to exist and thrive.

Car dealers need the automobile manufacturers to supply the automobiles for them to sell. Hardware stores need the products of many large manufacturers to supply their inventories and it goes on and on with plumbers, shoe stores; you name it. So demonizing large businesses is an indirect, but punishing, blow to small businesses.

There’s still a movement of so-called Occupiers, and others, who rave about the evil of corporations and how doing away with them would somehow help all of us, or at least give them the satisfaction of wrecking our economy.

Actually, one person can be a corporation and there are various types of corporations. However, if the company has more than 100 stockholders it has to be a C corporation and is subject to double taxation. That is when, and if, the company earns a profit, the profit is taxed at the corporate rate (up to 35 percent) and then if the company pays the stockholders a dividend, the stockholders have to pay tax on that dividend…double taxation.

Maybe the Occupiers and other corporation haters ought to demonstrate against the government for treating job-creating corporations in the private sector so badly.

(Bob Harper is a Tarboro resident who writes a column of local interest.)

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