The canaries in Obama's jobs coal mine...

In his State of the Union address last week President Obama stated that jobs would be his number one priority in 2010. Outstanding! However...two recent events give me pause as to whether or not he has the desire or competence to actually achieve something positive in that realm.

The first has to do with the hapless Securities and Exchange Commission, the people who couldn’t figure out Bernie Madoff was a crook despite the fact that people had been telling them so for almost 20 years. At the exact moment when the foundations of the Global Warming / Climate Change fraud are crumbling, President Obama’s SEC Chairman, Mary Schapiro, issues guidance to public companies that they should begin disclosing the risks of global warming on their businesses. That is exactly what American companies need in order to start hiring again, a sop to slip and fall layers and environmental groups who will follow the ACORN model of using threats and government sanctioned intimidation to liberate billions of dollars from corporate coffers. While this recommendation is certainly a jobs bill for lawyers, it will likely be a job killer for everyone else.

The second has to do with the Justice Department’s apparent desire to pursue Utah Republican Orrin Hatch’s ludicrous idea of investigating the Bowl Championship Series. Miffed that their teams never quite measure up when it comes to making it to the National Championship game, Senator Hatch and his friends have used the dubious argument that because BCS member schools receive federal research funds and student loan dollars, they should become toadies and put Utah or TCU into games for which they have not earned a position. Here again, while you could make the case that this effort is a jobs program (because it’s keeping at least some of the Justice Department’s lawyers from harassing employers) there’s more than meets the eye. The problem with this train of thought is that if the Justice Department can use such a tenuous connection to investigate colleges playing a football game, how confident can a business be that at some point they will not be open some sketchy investigation simply because they pay their employees with dollars printed by the Treasury Department, their employees drive to work on public highways, or they have packages delivered by the USPS?

Individually these two issues are little more than a nuisance at this point. What they do accomplish however is demonstrate exactly why President Obama is likely to fail in is pursuit of job creation. The first demonstrates that this administration is willing to burden American corporations with another bureaucratic obstacle, which means diverting resources from R&D, marketing and yes… hiring, just to advance its continued support for a discredited theory. The second demonstrates that he is willing, with Congressional acquiescence or encouragement, to use the thinnest of connections upon which to investigate an organization, which often lays the groundwork for later regulations.

These are the two latest examples of the fact that President Obama has no idea about what creates real jobs and productivity in this economy. From his “spreading the wealth” suggestion to Joe the Plumber to the $787 billion stimulus plan to ObamaCare to tax policy, it is obvious that the President has no understanding of why private sector companies succeed or why they hire employees.

At the most fundamental level, companies are generally in business to make money for their owners, be they shareholders or small business owners. Those businesses hire employees when they believe those employees will help them make more money in either the short term or the long term. Unlike the government, who can simply take money from the citizens whenever they need it, for whatever purposes they might like, businesses have to convince customers to give them money in exchange for a good or service. In order to do that successfully, businesses need to have an understanding of the environment they are operating in.

Big or small, businesses do not need to know the future in order to be successful. Across the country companies successfully navigate detours in their business plans all the time. It’s not a clarity of outcome they need, it’s clarity of rules. In order to put their resources to work most efficiently today, companies have to understand the rules they are playing by, and not just for the next month. Businesses make arrangements to deal with regulations all the time. They can adjust cash flow to minimize the effects of confiscatory tax rates; They can change the design or ingredients of a product as new laws come into existence; They typically implement safety features in the workplace as new threats develop. One thing businesses cannot deal with however is a government that opens them up to litigation and pressure where the onus is on them to prove they are not contributing to something that does not exist in the first place. What might be next? Will corporations be forced to prove they are not harming unicorns? Will small businesses be forced to prove they are not discriminating against ghosts simply because they are corpusclly challenged?

Another thing businesses cannot deal with is helter skelter regulation. Regulation by definition impacts businesses, and they are forced to deal with the facts as they are laid out. A bubble gum manufacturer can expect to deal with regulations pertaining to sugars, food safety or nutrition. (I’m not suggesting those are necessarily appropriate regulations, but simply foreseeable ones…) If the government can dictate who should play in a college football game, who’s to say they could not regulate what color shirts a chewing gum company’s employees must wear, what kinds of cars its executives can drive or even that the company should give money to less successful chewing gum manufacturers. In such an environment we shouldn’t expect employers to stay in business for very long.

In the pantheon of reasons why Barack Obama has no clue about what makes America great or what makes an economy successful, these are two of the smaller issues. From tax rates to government deficits to union intimidation there are far bigger issues facing businesses and employers when they have to decide if they are going to hire or fire workers. Small should not be confused with inconsequential however… canaries in a coal mine are always small, but never inconsequential.