I must admit annoyance when hearing politicians campaign on how they will create jobs. The reason is because politicians cannot create jobs. Government cannot create jobs (at least not value-based).
The only thing they can do in terms of job creation is to ensure an environment where entrepreneurs are free to create and where people are free to buy, sell and trade freely with one another. To the degree government does this and then stay out of the way, they have a hand in job creation. But they themselves are not the job creators.
Entrepreneurship is the engine that drives the economy and resulting overall prosperity. And, in a free-market based economy (not to be confused with Corporatism or Cronyism), one can only become wealthy by providing value that others are willing to pay for, and by providing that value to many people.
In other words, both parties — the buyer and the seller — come away better off than they were before the transaction. There is no limited “pie” to carve up. When entrepreneurs are allowed to create value for the marketplace, an unlimited number of pies are “baked.” Everyone wins!
What is the gunk that slows up the engine? Government red tape and unnecessary regulations. Whether on a federal, state, county or local level, the more needless and even counterproductive hoops an entrepreneur must “jump through” in order to get his or her business started and to keep it running – the less incentive they will have to do so. Or simply not be able to make a profit and thus go out of business.
The result: less value provided to others (products or services people want or need), less employment of others as the business expands (based on profits) and less money being circulated throughout the community that helps others earn money.
Now, is any type of regulation ever necessary? Sure; that which will protect the citizenry from force or fraud.
That aside, no…nothing more is needed. Other than for the politicians and bureaucrats to stay out of the way and let abundance happen.
So, please. Next time you hear a politician — any politician from either party — announce on television that they have a 50-Point, or 30-Point, or 27-point, or 78-Point Plan for creating jobs, remember this much better plan:
In fact, let’s call it “Bob Burg’s 1-Point Plan For Creating Tons and Tons of New, Value-Based Jobs.” It goes like this:
Get out of the way politicians and bureaucrats and allow entrepreneurs to create jobs!
Too simple? Naw. Just simple enough. (I’m Bob Burg…and I approved this post) 😉
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Bob,
I just went to a local SBDC event that was sponsored by our congressman and what you state at the end of your article ” Get out of the way politicians and bureaucrats and allow entrepreneurs to create jobs! ” is what I wanted to scream throughout this three hour event. Thanks for the article and I will pass this on to the powers to be. I truly believe bureaucrats can only stop job growth and never create job growth.
Your Friend,
Mike
Right on, Brother! -=- Government “help” to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off. [Ayn Rand] -=-
Penne: Thank you. That would be a funny statement if it were not so true in so many cases. Thank you for sharing with us!
Mike: Thank you for the comment. That had to be a VERY frustrating three hours! 🙂 Meanwhile, you are the embodiment of a person that has come from a horrendous circumstance and – despite the red tape – were able to create such phenomenal value for people that you have not only profited greatly but have helped many others do the same. Hats off to you, my friend!
In Italy they have a belief that the only way to wipe out organised crime would be to legalise it. That way the government would just get in the way and foul it up.
When an enterprise moves faster than the rules imposed on it then you have a real problem. Imagine winning a bid for a new contract and you can’t operate until a license or permit is in place, but you can’t have either without the contract. Time ticks away and the business owner could hit penalties because of the time to issue.
All levels of government over legislate and over analyse to the point where they lose the focus. We have a local outdoor market and some very good street food operators. Local government wants to move the street food off the street and the outdoor market indoors. The goal is to create a vibrant event centre in the town which no-one understands and no-one wants but will make all these small businesses invisible. This will cost jobs and a lot of tax payers money for some poorly thought out folly which has probably arisen from a “planning incentive payment” from developers.
The only way to boost the economy and also jobs is to boost the amount and speed of the cash flowing around the system. Only confidence in the economy will turn the tap and encourage people to start spending again.
Thanks Bob, This is a great article that states my beliefs succintly. Politicians need to realize where they should stand (which is somewhere out of the way)!! This will make the rounds in my networks!
Carl: Thank you. I greatly appreciate that!
Ross: Well said, throughout. I love the first paragraph. Too funny. Seriously, though, your thoughts were truly right on the mark. Thank you for sharing with us!
Yeah! Get out of the way politicians and bureaucrats and allow entrepreneurs to create jobs!
Very timely post, Bob. More and more people need to be aware of these principles and have courage to fight to protect these principles.
Yesterday, an article came where a new bill is on the way that allows the states to charge Sales Tax on the e-Commerce purchases based on the delivery location of the product. “Taxation without representation” is what this bill promotes and it’s amazing how politicians can even come with such ideas and get such bills passed…
Free Enterprise System is being attacked from all sides…. It needs help…
Kumar: Thank you. Great points, my friend. And, I believe it’s up to all of us to spread the word, and in a way that opens people up to their ideas as opposed to closing them off to it. Always interesting how Free Enterprise – the cause of so much abundance for all – continually comes under attack. I think one reason is that, as John Stossel has written, its benefits to society (especially, to the poor) are simply not intuitive. This is why we need to individually do our best to educate people about it to the degree that we can. Thanks again, Kumar!
Thank you Bob,
Well said, simple and to the point, those in government probably won’t be able to understand it though. 🙂
Bob… Once again…. You Rock… Clear message to politicians… Get out of the way, if you dont create hurdles, we will make the way… Hope they are listening…. 🙂
Gaurav: Thank you. So glad you enjoyed it. Are they listening? Hmm. 🙂
Jean: Of course. It’s much too simple and to the point. 😉 Actually, Jean, even if they do understand, it might not be in their agenda to change anything. The public; the voter is going to have to first really grasp the concept of the beauty and benefits of both free minds and free markets, and then communicate to their elected officials that they will not stand for any more of this nonsense. And, really, it goes for the politicians in both parties at all levels of government; those who take part in over-regulation and Corporatism/Cronyism in one form or another.
GREAT article and point Bob!!!!! LOL you cannot say Politician and Entrepreneur in the same sentence, without laughing . it’s a clash of interests. The same with simplicity and politician, or slavery and freedom. 🙂
Lene: A clash of interests indeed. Indeed!
Awesome article Bob! I have a friend here in AZ running for legislature…and he is a small business owner, who staffs an office of 64, provides health and retirement benefits and is running for office because he understands government doesn’t create jobs and he wants to start laying that foundation. I thought that was very refreshing!! 🙂
Christie: That’s terrific. I wish him the very best of success. We need more people like him – citizen legislators – who understand what running a business is like and are willing to take the message of entrepreneurship with him, using it to serve. Refreshing, indeed!
Bob,
You’re not only a gentleman and a genuinely good man….you’re a very wise man and when it comes to business I’d vote for “Bob Burg’s 1-Point Plan For Creating Tons and Tons of New, Value-Based Jobs.” It goes like this:
Get out of the way politicians and bureaucrats and allow entrepreneurs to create jobs!
Not only does it make all of the business sense in the world….if that type of clear thinking was applied to our country’s other issues we’d be on the road back to a united and productive country once again. #justsaying
Bill: Thank you. I really appreciate your complimentary words as well as your thoughts on the issue itself. Yep, aside from the protection of its citizenry against force and fraud, the most productive thing the government can do is stay out of the way. But they won’t make that decision by themselves; pressure must come from the voters on both sides of the aisle. Hopefully, these articles play at least a small part in leading to an understanding of why this is so important and provides some ammunition for others to be able to communicate the same.
I’ve heard this statement many times from various commentators and pundits, I agree with the premise, what regulations and rules specifically are you calling to be eliminated? A previous poster gave a good example of the local government moving the outdoor market indoors and street vendors off the streets, both of which seem intuitively counterproductive to the local marketplace. Please give some examples on a national or state level that we as citizens can request that our elected representatives eliminate to increase the efficiency and competitiveness of American business. With a national voice of citizens calling for specific change, we can effect those changes to improve American business.
Hi Mick: That’s an excellent questions. Trying to come up with specific examples of laws, rules, regulations and red tape that should be taken “off” the books would be almost never-ending, since there are thousands upon thousands upon thousands of these. Instead, there is an easier way: Take the basic legitimate function of government which is to protect the rights of its citizens (this is typically interpreted as protection against force and/or fraud) and then remove any and every law; all laws that do not fall into that category. Now, the question might be, after that is done, could there ever be any law put on the books again that does not specifically fall under the area of “force and/or fraud?” Probably not, but if there were, there would have to be a realllllly good reason for it, and one that was totally transparent to the voting public. You would soon see corporatism, cronyism and all sorts of laws with good-intent-but-bad-results be a thing of the past, resulting in a booming economy including enough jobs for everyone who wanted one and enough charity for those who are truly needy. Thank you again for your great question!
“Government cannot create jobs (at least not value-based).” Really? That’s quite an interesting comment to be posted on an Internet forum using World Wide Web technology to disseminate your message. The government created the very Internet technology you’re using to spread your message and the HTTP protocols were created in a government funded research facility by a British government scientist. Government spending doesn’t create value-based jobs? The folks in the Defense industry would probably beg to differ on that premise. Ditto the folks in road and bridge construction and maintenance as well as the water and sewer industries. Based on those examples alone the government has created and continues to create trillions of dollars worth of “value-based” jobs.
Your article is full of empty platitudes and preciously short on specifics. “Cut regulations”? Which ones? The ones that keep us safe from unskilled practitioners and ensure are properly trained and insured via licensing? The ones that give us clean air to breathe and clean water to drink? The ones that ensure the products we use are safe and effective? The regulations that keep our food and drugs safe and the conditions of their production sanitary? The ones that ensure our automobiles are safe?
Name one regulation you’d eliminate, Bob, instead of vacuous commentary calling them all bad.
Hi Mike: Let’s go down your list, if we may:
You wrote: {referring to my statement, “Government cannot create jobs (at least not value-based).”} Really? That’s quite an interesting comment to be posted on an Internet forum using World Wide Web technology to disseminate your message. The government created the very Internet technology you’re using to spread your message and the HTTP protocols were created in a government funded research facility by a British government scientist.
Bob: When the Internet was in the hands of government only it was not profitable and created few jobs. It was only after entrepreneurs got their hands on it that its potential for market value (thus profitability) was established and grew. Many people who were the ones using the Internet pre-commercial use were very worried and complained about the possibility of it eventually being used for commercial use. They had great cause to worry. Once entrepreneurs got their hands on it they were able to create value that not only has greatly increased the economy as a whole but has increased quality of life for the masses and has provided access and knowledge for people who previously would never have dreamed of such. It seems that free markets and entrepreneurship have added significant value to the Internet and to the general populace.
You wrote: Government spending doesn’t create value-based jobs? The folks in the Defense industry would probably beg to differ on that premise.
You wrote: Mike, it’s very important to read everything that someone writes, even when your inclination is to disagree. I made the point that protecting the citizenry against force and fraud is a legitimate function of government. In the U.S. Constitution, Article 4 – Section 4, it tells us that “…and shall protect each of them {referring to the individual and collective states} against invasion. Now, if you were to ask if I think that it’s legitimate that we have a military presence in over 150 different countries, I’d say no; that is not a legitimate use of government spending because it is not specifically for defense. That is more about corporatism/cronyism than it is about defending our country and its citizens. Those kinds of jobs (when not actually defense-related) are not value-based jobs regardless of what those in the defense industry feel.
You wrote: Ditto the folks in road and bridge construction and maintenance as well as the water and sewer industries. Based on those examples alone the government has created and continues to create trillions of dollars worth of “value-based” jobs.
Bob: While I don’t see that as falling under the premise that I was making in the article (that needless government rules, regulations, red tape are greatly hurting the economy), your above point is very legitimate and well-taken and applies to all of them. If it’s something that is a legitimate use of taxpayers money (i.e. the roads and bridges need to be built), I don’t think most people would look at that as something that hurts the entrepreneur, hurts employment or is in any way counter-productive. Of course, we need to be very careful that jobs aren’t being created just to find an excuse to create job that have no value (No “bridges to nowhere”) :-). But, sure, when these things are genuinely needed for the benefit and safety of all concerned, you are right on the mark with that one. One thing though, and I believe it’s an important distinction: does government “create” those jobs? I’d say it’s more that they fulfill those jobs that are necessary. And, they’ve been made necessary through expansion caused by entrepreneurship and free-markets. If you believe that’s just semantics on my part rather than an important distinction, I can certainly accept that and really don’t have a problem with it.
You wrote: Your article is full of empty platitudes and preciously short on specifics. “Cut regulations”? Which ones? The ones that keep us safe from unskilled practitioners and ensure are properly trained and insured via licensing?
Bob: There are a couple of different topics within the above statement. First, regarding which regulations to cut. As I replied to Mick’s excellent question in the previous answer, “Trying to come up with specific examples of laws, rules, regulations and red tape that should be taken “off” the books would be almost never-ending, since there are thousands upon thousands upon thousands of these. Instead, there is an easier way: Take the basic legitimate function of government which is to protect the rights of its citizens (this is typically interpreted as protection against force and/or fraud) and then remove any and every law; all laws that do not fall into that category.” This is one reason why, Mike I was short on specifics. The specifics aren’t necessary when the premise is that anything other than protecting the citizenry against “force and fraud” are illegitimate uses of the law. Now, let’s go to the next part of your question.
You wrote: “Cut regulations”? Which ones? The ones that keep us safe from unskilled practitioners and ensure are properly trained and insured via licensing?
Bob: Mike, is that really what you think my point was? To make the citizenry unsafe? Please know that it is okay to argue a point without implying that the person you disagree with is some kind of uncaring or unthinking person. I don’t believe I’m either one of those. In answer to your question about regulations that would keep people safe from unskilled practitioners, there is a way to handle that is far better than by government licensing. Let’s get to that in a moment. First, it’s also important we be concerned about practitioners that commit force or fraud against their patients? That is surely a legitimate function of government based on what I wrote in the original article. Again, protecting the citizenry against force and fraud is a legitimate function of government. So, now, what about licensing? Licensing by government entities is actually a way that the powers-that-be in the profession itself maintain control over their profession and those within it, as well as (and this is key), those trying to break into it. The history of licensing is not as a self-policing organization or one in which government polices it particularly well, but one in which those running the profession (those already established) have solicited government’s help in giving them the power to keep people (i.e. future competitors) out. This creates less competition for them, driving up prices, etc. The medical profession is a particularly egregious example (though many others are just as guilty) regarding how the profession itself (rather than the consumer marketplace) actually controls the people who can participate and the pricing (this is still another type of cronyism). A much more effective type of “regulation” has nothing to do with the government, and that is 3rd-party accreditation and certification. It’s much more effective and protective toward the consumer than is government regulation. I wrote a brief blog on this last year with some examples. If you are interested, here is the link: http://bit.ly/kZiM6o. Your examples continued with…
You wrote: The ones that give us clean air to breathe and clean water to drink? The ones that ensure the products we use are safe and effective? The regulations that keep our food and drugs safe and the conditions of their production sanitary? The ones that ensure our automobiles are safe?
Bob: Mike, if any of the above can absolutely not be handled by the free-market and 3rd party accreditation and certification, then certainly there is a time and place for government regulation. But, in most of these cases, government ends up making the problems much worse, and the only ones who benefit are the major corporations or special interests that buy their special favors, rules and regulations. By the way, what is generally more effective than regulation is the understanding that the company (and those responsible for running it) that does something wrong (i.e., ruins the water supply) will pay heavily for it. Punishment (including the threat of jail and fines, not to mention losing your business) typically works much better than the regulations themselves, which the good, honest people are already following. Example on a local level: there are numerous, numerous laws preventing a restaurant from serving food that can make people sick. About ten years ago a company that, one night, served food that caused numerous people to be sick with food poisoning received very bad publicity for it. Several months later that restaurant was out of business. People just stopped going. That’s the free market at work. Now, you might be thinking, “So, Bob, are you saying we should let restaurants make people sick?” No, I’m not saying that at all. I’m saying that nobody who opens a restaurant wants to do something that will cause their restaurant’s reputation to suffer and go out of business. The market tends to be the best regulator of behavior and, as already-mentioned, third-party certification for many, many products or services, is also extremely valuable and generally much more effective than rules, laws and regulations. Oh, and where you mentioned “food and drugs” the number of people who have died in this country because the bureaucrats at the FDA would not allow a drug to be used by its citizenry has cost many, many more lives than it has saved. I’m talking about drugs that had already been okayed and in use in other countries. Not to mention, the idea of some bureaucrat being able to keep a parent from having their children take a cancer-fighting drug that the parents (after carefully consulting with their doctor) had decided they wanted to try, is unconscionable in a “free society.” Yes, this happened to a friend of mine in the 70’s who actually had to leave the country to take the medication that helped cure his cancer (Thank Goodness they had the resources to send him) and it has happened many times with many people since.
You wrote: Name one regulation you’d eliminate, Bob, instead of vacuous commentary calling them all bad.
Bob: Again, I didn’t call them all bad. I made the exception for the legitimate government function of protecting its citizenry against force and fraud. Regarding the first part of your question, I answered that above by saying that any rule, law or regulation not covered under “protection against force or fraud” should be eliminated. Again, the key premise of the article was that needless regulation keeps entrepreneurs from creating jobs, putting people back to work in a way that adds value to all involved, and creates a society of abundance.
Thank you for writing.
Bob,
I appreciate the patience, clarity and commitment you’ve shown to not only address all questions and comments but to have done so in a very intelligent and gentlemanly manner. The comment thread on this blog merely underscores what those that know you are already aware of…you’re a classy guy.
Thanks for demonstrating a very appropriate and effective approach to communicating without rhetoric or emotion. Lesson appreciated.
Bill
Thank you, Bill. I very much appreciate you saying that!
Bob, I agree with everything Bill said!
Thank you, Christie. So great having people like Bill Ellis and Christie Ellis in my world, even though…as rumor has it, they are actually NOT related! 🙂
Lol!! That’s what we’ve been told. 😉
Thank you Bob for sharing. I insist on adding ‘relationship-centric’ entrepreneurs. My personal life-long experiences working as an employee for business owners who were more profit-driven is that they saw us as a mean to an end, their end- used like an equipment. Although I was very grateful for the opportunity, I believe relationship-driven should be primary and any less is unacceptable to humanity.
Mardy: I think that’s important, certainly. It’s just sort of a different topic. It’s not up to government to decide who to remove the red tape and needless regulations for. Anyone not committing force or fraud is eligible to begin a business, providing they have the means to do so, or legitimately find those means. It’s up to the market to decide if that entrepreneur’s business survives or not. And, as we’ve seen consistently, those entrepreneurs who *are* “relationship-centric” (focused on providing value to others, including looking out for the benefit of both their employees and customers) fare much better than others in the marketplace. Thank you for sharing with us.
Great post Bob. It’s hard to believe that there are people who think that is any other way to go about creating jobs. When we had our customer service training company our company policy was that we would not work for a tax funded government agency. We refused to feed the beast even though we were asked many times to do so. We did not ever want to rely on government work to survive. If more business people would refuse to feed the beast we just might be able to get things back on track. Who is John Galt?
Bob: Great to hear from you. Been a long time, my friend. Thank you for your kind comment. I so admire your commitment to your principles. Refreshing, indeed. It reminds me of John Allison, the former CEO of BB&T who would not loan to any company that took advantage of eminent domain that was actually cronyism. (Such as the Kelo v. New London case) He also refused to participate in sub-prime mortgages, insisting his bank deal only in conventional loans. When the housing and financial markets crumbled, Mr. Allison and his bank were left standing tall, both in reputation, and profitability. When government came knocking with bailout monies, Mr. Allison refused them because he felt it was immoral. The fact that he didn’t need it was secondary. Unfortunately, the government forced him to accept the bailout funds. And, like a character out of an Ayn Rand novel, he resigned the very moment he signed the papers. (I don’t believe he went to Galt’s Gulch, however) 🙂 I wrote a blog post on this a while back. It’s at http://bit.ly/virHLv if you’re interested. By the way, we have a similar policy the company you had. We will only accept work from a government agency if it is one that is carrying out a legitimate function of government). Bob, thanks again!
The data show the US leads the world in entrepreneurship (http://www.economist.com/node/13216037). Although culture is certainly part of the key to our success, I think policy has an enormously important role to play in creating an environment that encourages entrepreneurship and investing in new business creation.
The main instrument of such policy has traditionally been the tax code (leading of course to a very complicated and convoluted system). Its still our best instrument to encourage behaviors we feel are in the country’s best interest. From buying a house (to get the interest deduction), buying a giant SUV or a hybrid car, there is/are/have been tax incentives to encourage these behaviors.
Everyone knows that cash is king in any business and access to capital at a reasonable cost limits growth especially for folks in the high tech businesses which are also high risk. For example, I run an early stage biotech company–the phase our technology is in is called the valley of death because its so hard to find money to get to the other side. The government could help by creating federal tax incentives for investing in clean tech, green tech, biotech, etc which is high risk/high reward but also has the potential for enormous public good as well. This is probably a better approach than the government deciding who gets the capital (e.g. Solyndra).
So while I agree that entrepreneurs are the real job creators, politicians CAN do more than just get out of the way. Unfortunately it seems like they often can’t get out of their own way!
Thanks for the post Bob, great discussion!
Dawn: Thank you. So glad to have you join the discussion. I would imagine the US still leads in entrepreneurship because many Americans still see that as the best of other alternatives and have the drive to create and prosper. Imagine how much more of it there would be if the red tape and needless regulations were removed? Funny thing is, true free-market capitalism is so powerful that even as held back by government as most entrepreneurs are today, even within the strict confines of the seemingly infinite number of rules slowing things down (and not allowing some companies to expand or even survive) it still goes on, and is still a wonderful opportunity for those who can bring significant value to the marketplace. It’s astounding, really!
Regarding your thoughts on policy being important, indeed it is. And, it’s not particularly difficult to figure out the best policy. To the degree entrepreneurs are allowed to create, there are more jobs, more wealth, and a higher standard of living for all.
In terms of what you said regarding The main instrument being the tax code, it has now gotten so enormously expansive that…well, I don’t think I need to say anything more about it. It’s so onerous it is now looked at with absolute disgust by most.
Regarding what you said: “Its still our best instrument to encourage behaviors we feel are in the country’s best interest. From buying a house (to get the interest deduction), buying a giant SUV or a hybrid car, there is/are/have been tax incentives to encourage these behaviors.”
I must respectfully disagree with what I believe is your premise: That that is a legitimate function of government to encourage buying behaviors. Why would you think that? First, when you say, “our best interest” who is “our?” Is every one of our hundreds of millions of citizens in this country’s interests the same? Why not simply create an environment where people are free to live their own lives and make their *own* decisions, providing they don’t infringe upon the rights of anyone else to do the same? Giving government the power to pick winners and losers has not/does not work for us (other than those with the money to buy special favors, rules and regulations that help them but hurt their competitors and provide consumers with less choices). This is one reason we are in the mess we are in. Remember, Dawn…it *always* becomes political, and the politicians – allowed to operate outside the “chains of the Constitution/Bill of Rights” end up selling out to the special interests (via their lobbyists) who trade campaign contributions and other goodies for special rules, laws and regulations that give them an unfair advantage.
Regarding your third paragraph, yes, you’d like there to be incentives so that your early stage biotech company has an easier time getting funded. Well, I’d guess that so would a lot of other people who are starting up a business in their own field which might be different from yours. But, Dawn, it “always” turns into Solyndra (which you mentioned) when that happens. How about if government simply takes the shackles off so that investors have more money that they can invest where they see fit. In your case, the consuming public has become very responsive clean tech, green tech, etc. Let the market (a huge group of individuals) make their own decisions; please don’t ask government to make people’s decisions for them. Again, they’re not very good at it. And, it always becomes political.
Regarding your fourth paragraph, again, I’d respectfully disagree, other than with your last sentence in that paragraph that, as you wrote, says: “Unfortunately, it seems like they often can’t get out of their own way!” Exactly. Even if they could do more than just getting out of the way (which I disagree is their legitimate function to do in this case)…they “can’t” get out of their own way. How many times do we have to see this take place before we stop putting our trust in the “wisdom” of government?
Thank you for being part of the discussion, Dawn.