Saturday, June 12, 2010

The Decline and Fall of Everybody ... Alan Caruba

The Decline and Fall of Everybody
By Alan Caruba

I have a friend of over twenty-five years who I watched build a single idea for a business into one that, at one time, was taking in a million dollars a year. Then the Internet came along, followed by the 2008 financial crisis.

After a reasonable period of agonizing, my friend sat down and put the numbers on the page. They added up to firing all his employees and not renewing the lease on the office in which he’d been since the mid-1980s. Tech savvy, his business has gone “virtual.” As he put it, “I will make sales from my cell phone.”

Now take my friend, the classic entrepreneur and small business owner, and multiply him by thousands across the fruited plains and purple mountains majesty. Not only has the economy crashed, thanks to the latest “bubble” of bad housing mortgages, but it happened just in time to ensure that Barack Obama who never owned a business, met a payroll, or worried about selling anything other than himself was elected president.

Next on the list of burst bubbles will be all the “green” technology and “clean energy” companies into which the government has been pumping billions in subsidies for wind and solar power, grants for research on biofuels, electric cars, and all the other “green” projects the public continues to be told represent a bright new world.

Why would anyone think that a “community organizer”, academic, and briefly a working lawyer, could know or even be brought up to speed fast enough to know what to avoid and what needs to be done to put people back to work or help small to medium businesses? The answer is he couldn’t and he wouldn’t and he didn’t.

Obama’s most basic instincts are a liberal distrust of “big business”, “Wall Street”, and anyone else involved in shaping and making the economy. This is particularly true since his political rise has been fueled by millions from unions. He is their man. They own him. He is beholden to a number of other special interests, but that is where his heart is. That is where he looked for and received campaign funds, campaign manpower, and votes.

Once in office, he set about reversing the slow and well-deserved decline of unions that, while having a long-ago past history of correcting working conditions, are now totally parasitic no matter whether it is the auto or any other industry, or whether it is in the public service sector where they toil as government workers, teachers, and others whose work rules, health benefits, and pensions have contributed to the insolvency of most states and cities.

They and the nation’s other blood-suckers, the lawyers, are Obama’s chosen constituency and everybody else can just plain go to hell or shut up and take a government-issued check for a return on taxes you may not have paid (40% do not pay taxes these days), your food stamps debit card, or any of the other government handouts that keep people docile and unproductive. Don’t worry, when your unemployment benefits run out, Congress will just extend them.

The problem is that Congress and the nation are just flat broke. At some point all the borrowing will stop because those doing the lending will decide they are not seeing any real return on their investments in U.S. Treasury notes.

The problem is that one of the wonders of globalization is that when one country goes belly up, it affects all the rest. Sooner or later the whole global network of central banks is likely to run out of money with which to bail out one another. Then what?

My friend will run his business as best he can in an economy where his customer base has increasingly reached the same point that whole nations will. They will have to decide where to spend what little money they have.

This is going to become an increasingly difficult decision when Obama and the Congress raise taxes at the worst possible time, thus sucking anywhere from 40% to 60% or more out of the pockets of the middle class, the entrepreneurs, the managers, the professionals. If they own homes as many do, they will cease to have any equity and prove hard to sell.

So it will be the decline and fall of everybody other than the millionaires who can afford the lawyers and accountants to show them how to pay less taxes than a chimney sweep or bus driver.

My friend is sounding a lot more relaxed these days. He is no longer responsible for all the costs involved with hiring, paying, or firing anyone. He no longer has to meet the rent on his office. Even so, he has discovered a whole new layer of reporting to the IRS regarding his venders and must in turn provide data to those who continue to use his services. American businesses, large, medium and small are strangling on government regulation and taxation.

There is a ripple effect here. It begins with the laid-off former employees who cannot find new jobs. It includes the owner of the office building who has space he cannot rent to a new business enterprise. It includes a copier machine lease allowed to lapse. As he put it, he can walk down the block from where he lives and use printing and delivery services. For list maintenance and other IT services, there’s always the vendor in Bangalore, India.

© Alan Caruba, 2010

Alan Caruba writes a daily post at An author, business and science writer, he is the founder of The National Anxiety Center.

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