I can’t speak for the U.S., but here in the U.K., I noticed a significant increase in recruitment ads after the coalition government was agreed, and another significant increase after the budget. That’s just my perception, though. That’s all, IMO, due to increased certainty of the future.
In my many years experience as a Gov contractor, good times mean more people, which means less efficiency per person (but the marginal value of each is worth it). This is partly because in good times, the available pool of talent is reduced. Bad times means you get rid of the less-efficient (per Wesley’s point), since you can’t afford to carry them, necessity is a mother, etc.
Business don’t exist just to make a profit, of course. They also exist to stamp out competition. This is known, ironically, as competition.
No, that is simply a method towards profits.
More accurately for everyone - business exists to give value to investors. If you own the business, you might close on Tuesdays since that is the day you like to fish. You value fishing, you close. If you value your truck, you have that on the company books. If you want to help/spoil your kids, you put them on the payroll regardless of whether they are worth what you pay them.
If you are a large, publicly traded firm, you exist to ensure a market beating total return to shareholders (price change plus reinvested dividends as shown in the annual report). You do this with better product, cheaper price, etc. To get there you might need better employees, or you might want fewer cheap employees depending on the market. If you can sell more product by being nice, then you be nice. If you can sell more product by being evil, then you be evil.
This is quite obviously nonsense. Businesses exist to make money. Not necessarily a profit, mind you - some businesses are non profit, and so while they seek revenue, they do not pay shareholders profits. But they still only exist to get money.
It’s rather obvious that most businesses not only don’t stamp competition, bu in 99.999% of cases are founded and run without even entertaining a smidgen of hope that they ever could stamp out the competition.
Okay - big businesses. They don’t dominate their market, they pay for it in share price.
This is a problem with shareholder value: it can easily conflict with customer value.
I hate to keep being contrarian, but, again, this clearly is not true. You’re also moving the goalposts; before you said STAMP OUT competition.
But in fact big businesses almost never do this. McDonald’s is never going to be the sole fast food purveyor or anywhere near it. Shell will never be the only oil company, Toyota will never be the only carmaker, and so on. Even Walmart will never be the only retailer. In fact, if such a business were to get too close to stamping out competition they’d risk the government’s wrath. The days of true large scale monopolies are over.
Concentrating on destroying the competition - why would you even assume that’d be good for share prices? You don’t want to race your competitor to the bottom. RIM could really bite into Apple’s market share for smartphones and hurt Apple badly by giving Blackberrys away for free. Would that help RIM, though?
I work for a business that has as its explicit philosophy the desire to be #1 or #2 in every market it competes in.
So how do you think we do it? Do we try to sabotage other companies? Do we buy up their suppliers and cut them off? Do we dump products on the market under cost, in an attempt to put them out of business? Just what is the mechanism? Bear in mind that I work for one of the largest companies in the world, and we could no doubt direct enough resources to destroy just about any of the smaller companies we compete against.
So how do we try to maintain this dominant position? I’ll tell you: By working our asses off. By demanding excellence from everyone. By constantly evaluating the market and the competition, trying to understand what they’re doing that we’re not doing. By trying to make better products than the other guy.
I’ve been in lots and lots of meetings where the long-term strategy of market dominance was discussed. I have NEVER heard anyone suggest trying to use monopoly power to crush our opponents or buying up a competitor’s suppliers, or anything else remotely nefarious. The strategy is always the same - higher quality, more efficient production, better product plans, more sensitivity to what customers want.
I ran my own business for ten years. Those of you who have not done this have no idea how hard it is. You are faced with decisions almost daily that could cost you serious money or put you out of business. If you’re a small business, every employee you hire is a potential disaster. Every deal you make carries risk. If you have an idea for a new product, or for upgrading your current product, you have to put your own hard-earned cash on the line.
You have to pay employees money you could have kept for yourself. You have to buy raw materials, upgrade computers, buy machining equipment - all of which will lose money until your product sells enough to recoup your investment. IF it does. If you read the market wrong, or underestimate development costs, or if any one of a million things go wrong, all your planning can be wiped out.
Small businesses are responsible for about 70% of new jobs. Most of them are under-capitalized, operating on a shoestring, and only one or two big unexpected costs away from having to cut back investment or go bankrupt.
I can tell you from personal experience that hiring my first employee was a terrifying thing to do. Because I basically had to give him my own salary, and then hope that adding him would raise sales enough to pay me back. It would have been easy for me to decide not to hire someone and scale back my plan for growth and be happy as a one-man shop.
You think uncertainty isn’t an issue? Tell you what: You hire someone today, and a year or two from now I’ll tell you if you’re going to have to pay an extra $3,000 per year for his health insurance. You go ahead and take out that $500,000 loan to build your machine shop, and later on I’ll decide what interest rate you’re going to have to pay. Hire a full staff, and later on I’ll tell you if I’m going to pass a law that allows them to unionize, make any demands of you they want, and if you don’t agree you’ll be shut down until a government arbitrator decides how much you can afford.
When uncertainty goes up, the profit requirement increases. It’s like investing in stocks - the higher risk stocks generally return the most. People demand more reward for taking on more risk. It’s easy to see how this costs jobs. Jobs in all ventures that have low marginal rates of return or require long-term investment are lost.
Most small businessmen work like dogs. The successful ones, anyway. They have to supervise all operations during the day, and sometimes they’re the ones out making the product or doing the service. Then at night or on weekends they have to do their books, prepare their tax forms, and do all the other stuff the government requires of them.
Take the new health care bill - buried in there is a requirement that businesses have to file a 1099 form to the government for every supplier who provides more than $600 in goods. this is a 1099 form. Bear in mind that for a small business, accountants are expensive. The smallest of businesses have to do this work themselves. Also bear in mind that the small business owner is probably not an accountant, and is often someone who started a small business from a trade. He may not be university educated. Paperwork like this is not easy for him - it might be terrifying.
That one little requirement in the health care bill could easily require a small businessman to have to file dozens of 1099’s per year. And not only that, all the people he supplies to will have to file their own 1099’s, and he has to take time to provide the information to them they need such as his tax number, legal company name, etc. And this is but a couple of paragraphs from a 2,000 page bill. The financial reform bill is another 2300 pages. A small businessman may have to pay an accountant or a tax lawyer or a business consultant just to tell him what new regulations he is now responsible for.
In an environment where idiot senators come up with ideas like this every day, and they get signed into law with no scrutiny, no fanfare, and no warning, businessmen get understandably worried. And frustrated. Every new law puts another burden on them.
If you can’t see how that can cause small businesspeople to say “The hell with it” and stop hiring, then you don’t know what it’s like to be in that position.
Right. But here in Septic America, the opposition, who were definitely out of power for two years after massive fiscal irresponsibility, have been talking about “uncertainty” for over a year. It goes something like this:
"We can’t pass these new laws because the economy is bad.
"The economy is bad because businesses aren’t hiring or investing in capital improvements.
"Businesses aren’t hiring or investing in capital improvements because there is an uncertainty about what new laws will be passed.
“So let’s take as long as possible to pass any new laws!”
Which of course increased “uncertainty.” The logic isn’t just circular, it has freaking epicycles!
The new laws? Things like health care reform (read: standards for private health insurers & expanded access to public health insurance for the poor); cap-and-trade (a watered-down carbon tax); and some semblance of restrictions on the financial companies that just threw the world into chaos. Yeah. Those.
Oh noes, Sam! A one-page tax form? Gee, I wonder if there are any agencies that would happily fill out tax forms for a modest fee, Sam.
As for the costs, our politicians have been making damn sure for years that shoestring-budget small businesses don’t have to pay for health insurance. That’s not changing now. Too bad for anyone working at a small business, of course.
Still, it comes back to this. We should have delinked health insurance from employers a long time ago. The “moderate” answer to health care was overly bureaucratic. Better than doing nothing, but not as good as if the left had just opened up single-payer, and declared eminent domain on the private health insurers.
Sam, I didn’t even realize that the second half of your statement above was open to debate.
Clearly, from
- The phenomenally high post rate of some of the SDMB posters here, plus
- Their description of their day-to-day lives
most of the people you are debating on these issues work for the government, academia or are disabled and/or unemployed. A smattering here and there appear to be individual contributors in larger organizations or independent contractors.
Very, very few people who debate on this board have built or run even medium-sized organizations with revenue or P&L responsibility.
So yes, of course they don’t know what it’s like to be in that position.
Which isn’t necessarily wrong or a bad thing, except when such people acquire the means of legal force to implement their wrong-headed approaches to problems like this on a free economy. That would be a bad thing, because they wouldn’t have any idea what they are doing.
Unfortunately, that’s what we have with the Obama administration. As the link title says in self-explanatory fashion “This graph explains a lot”
http://blogs.ajc.com/kyle-wingfield/2009/11/30/obamas-cabinet-this-graph-explains-a-lot/
The typical Glenn Beck interpretation of this graph–that less than 10% of Obama cabinet appointees have any private sector experience–was debunked months ago.
Of Obama’s nine cabinet appointees, three have extensive experience in the private sector:
[ul]
[li]Shaun Donovan, Obama’s secretary of Housing and Urban Development, served as managing director of Prudential Mortgage Capital.[/li][li]Energy Secretary Steven Chu headed the electronics research lab AT&T Bell Laboratories.[/li][li]Interior Secretary Ken Salazar has been a partner in his family’s farm and owned and operated a Dairy Queen and radio stations in his home state of Colorado.[/li][/ul]
Three others were laywers in private practice (Secretary of State Hillary Rodham Clinton, Agriculture Secretary Tom Vilsack and Commerce Secretary Gary Locke). And Treasury Secretary Tim Geitner worked for Kissinger Associates, a consulting firm that advises international corporations on political and economic conditions overseas. Joe Biden founded his own law firm and supplemented his income before Congress by managing local properties. OMB director Peter Orszag founded his own economic consulting firm. Expand the list beyond the cabinet to include “senior level advisors”, at least 25% have experience as private business executives (compared with 38% for a similar group under Bush).
Sure, but did any of them have extensive experience with Arabian horses? In times of crisis and natural disaster you don’t want a bunch of ivory tower liberal elites, you need people with knowledge about Arabian horses.
Do corporations have any responsibility to the country that spawns them? Our corporations have created plenty of jobs the last decade, in India, China and S. Korea. They could have built here. They chose not to to increase profits. Many other countries think it is a good idea to protect their jobs. You can not go into other countries and take employment from their people. If it makes money, we love it.
When I worked at an automotive supplier our Engineering dept. had employees from many countries . We were training them and they would take the jobs with them when they went home. Many of us resented it but the company made it clear they would can you for insubordination and fight any unemployment if you resisted. You had to train them to do your job.
The jobs still existed. But not here.
I’m confused. Do you think that the 1099 requirement is new? Has it been extended to those providing goods, not services? (Which makes no sense.) Are you unaware that any freelancer gets tons if 1099 forms already, and your link referred to changes to software already in place to process them (which looks pretty minor to me.) My wife gets a load of 1099 forms. When I do grant reviewing for NSF I do one, and I get one for paid tutorials. Small or any businesses know very well how to handle them. BTW, suppliers do not have to file 1099s, they just have to make sure they wind up on their taxes, which TurboTax does quite nicely already, thank you.
So, please let me know who would have to get 1099s who don’t already, or please let us know what the hell you’re talking about.
ETA: And a small businessperson who can’t handle the paperwork shouldn’t be in business. That’s as much a part of it as marketing strategies and income collection. No one has to hire a full-time accountant - that kind of work is commonly outsourced, and there are tons of temp agencies providing accountants who advertise on the radio. Businesses have to file the proper forms for full time employees also. They have to do taxes. I have to file a Schedule C for the pittance of outside income I get - it hasn’t stopped me from doing those jobs. I think the average small businessperson is more clever than you give him credit for.
I certainly hope so. Unfortunately, the only mass political movement this Great Recession has spawned has been the Tea Party movement. The Tea Party movement wants the government to do absolutely nothing to help the unemployed. Its goals are completely consistent with those of the corporate establishment, that has done well during this crises, just as it has done well since the election of Ronald Reagan in 1980.
Franklin Roosevelt never had to contend with a mass populist movement on the right. The mass political movement at the time was the labor movement. This was to the left of Roosevelt, but it supported him, and pulled him to the left.
There is no political movement of the unemployed, the under employed, and those whose duties have increased although their pay checks have not. Often that have had to take pay cuts to keep their jobs. Meanwhile profits rise. All of this says bad things about the political culture of the United States. 
An internet message board is a very poor place to criticize others for…posting on an internet message board.
If you want to put up some trade barriers so that imports don’t undercut the prices of domestic production, then we can keep the jobs in the United States. However, when imports of equivalent quality can be had for significantly less than the cost of domestic - you have a choice. The company can go out of business, or it can move some jobs to where the labor is cheaper.
“Buy American” sounds great, but most people won’t follow it if it costs them too much.
But just think if there weren’t taxes or forms to fill out. If government could just get the hell out of our business’ business, they could fire their accountants and hire more employees.
You’re absolutely right, Obama needs to hire more people like Sam Stone, you know, Canadians with real world experience running businesses in Canada.