The stock market tumbled sharply in the wake of Obama's election a week and a half ago, and the plunge is being attributed by some to fears that President Obama and the Democratic congress are going to raise the capital gains tax, the income tax, and the minimum wage, all of which would be very hard on businesses that operate on narrow profit margins.
Obama could perhaps reverse the downward economic trend before he even takes office. All he'd have to do is promise that he will not impose any new regulation, tax, or new minimum wage rate on businesses, and will in fact ease existing regulations and taxes on business. If he promised that his administration would fight to extend the Bush tax cuts and reduce regulations, investor confidence in the future of business would likely rise and the market might well recover. As it is investors fear that business is in for some very tough times under a Democratic economic hegemony.
President-elect Obama wants to help the poor. So do most people, but the poor are not helped by handouts and stimulus checks. After they've spent their check they're still poor. The best way to help people struggling to get out of poverty is to free up business to hire the marginal worker, the employee they would not hire if they had to pay high taxes and benefits. If burdens on employers are reduced jobs will become available and those who want to work will be able to find jobs.
But if we do what the Democrats and Obama have promised to do, if we increase the cost of running a business by taxing and regulating, unemployment will continue to rise as businesses retrench and cut back on all but essential expenses. In such an environment the primary employer is going to be government, and we will have become Venezuela.
RLC
