Charles Koch: How to Get Our Economy Moving Again

If there is anyone in the world who knows how to create wealth and generate good, high-paying jobs, it is Charles Koch. In USA Today, Koch sets out a basic prescription for how to improve our economy, accompanied by some eye-popping statistics:

Like most Americans, I am deeply concerned about our weak economic recovery and its effects on millions of families. Opportunity, especially for the young and disadvantaged, is declining. High underemployment has become our new norm. …

Too many businesses focus on getting subsidies and mandates from government rather than creating value for customers. According to George Mason University’s Mercatus Center, such favors cost us more than $11,000 per person in lost GDP every year, a $3.6 trillion economic hit.

That is astonishing. Everyone knows (unless he is a liberal economist like Paul Krugman) that cronyism promotes inefficiency. But the magnitude of the problem is stunning: if the Mercatus Center analysis is correct, cronyism is deflating the economy by around 21%! Imagine if every American got a 21% raise: that is only a small part of what free market economic policies could accomplish, if they were not blocked by the Democratic Party. Then, of course, we have the problem of excessive government regulation:

Federal rules cost America an estimated $1.86 trillion per year, calculated the Competitive Enterprise Institute. At Koch Industries, we’ve seen how punitive permitting for large projects creates years of delay, increasing uncertainty and cost. Sometimes projects are canceled and jobs with them. Meanwhile, 30% of U.S. employees need government licenses to work. We need a system that rewards those who create real value, not impedes them.

The main thing standing between you and a higher income, assuming you own an alarm clock, is the government. More:

[W]e should eliminate the artificial cost of hiring. Government policies such as Obamacare have given businesses a powerful incentive to hire two part-time people to do one full-time job. This trend was reflected in June’s employment data, which included the loss of half a million full-time jobs. In 2007, 4.4 million Americans worked part-time jobs because they could not find full-time work. That number now stands at 7.5 million, up 275,000 in June.

The Obama administration hailed the June employment data as a triumph, even though the number of full-time jobs declined by a half million. They want you and your children to accept a “new normal” in which part-time employment as a barista is a reasonable expectation for a college graduate.

Government likes for its citizens to be lazy, incompetent and dependent. That’s bad for the citizens, but good for the government:

Finally, we need greater incentives to work. Costly programs, such as paying able-bodied people not to work, are addictive disincentives. By undermining people’s will to work, our government has created a culture of dependency and hopelessness.

Government control over the economy, promotion of dependence and cronyism have been tried. They have failed. It is time for something different:

Our government’s decades-long, top-down approach to job creation has failed. Its policies have made our problems worse, leaving tens of millions chronically un- or underemployed, millions of whom have given up ever finding meaningful work. In doing so, our government has not only thwarted real job creation, it also has reduced the supply and quality of goods and services that make people’s lives better and undermined the culture required to sustain a free society.

When it comes to creating opportunities for all, we can do much better. It’s time to let people seek opportunities that best suit their talents, for businesses to forsake cronyism and for government to get out of the way.

A friend who knows Charles Koch well describes him as a genius. I can believe it: creating tens of billions of dollars in wealth and tens of thousands of productive, high-paying jobs probably does require a touch of genius. But when it comes to politics and the economy, what Charles Koch has to say is just common sense.

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