C. Edmond Wright has become one of my favorite writers at the American Thinker. He is an entrepreneur who closed his business on the day that President Obama was elected. He explains today why he considers that to have been the right choice. In his article today, “Dear Mr. President: Why We Are Not Hiring” he trys to explain to Mr. Obama about risk [italics his]:
And since you clearly do not understand business at all, let me give you a short primer:
Any business idea, from the first day it is hatched, is nothing more than a series of cost-benefit analyses that the idea-holder either acts on or passes on. Sometimes the first decision is to forget the idea. Sometimes the first decision is to move ahead and invest some cash.
Perhaps a few million cost-benefit analyses later, you might have Microsoft or Home Depot or ESPN. Or you might have Bill’s Plumbing or Johnson’s Quality Homes or a café or an electrical wholesaler, and so on. And those businesses still operate on a constant stream of risk-reward decisions. In the business world, there is no neutral gear.
(There: Now you have more useful information than Jamie Gorelick or Franklin Raines got from Harvard.)
Thus, each time a risk factor is changed, the small business man has to determine whether he is going to hire, retain or layoff employees. One huge risk factor in the US is the promise to raise tax on people making over 250K (or was it 100K? the number keeps changing). Many limited partnerships and sole proprietorships are thus exposed to the full brunt of such taxes. Thus, the risk response will be to lower the number of employees and make less than that threshold where the extraordinary taxes kick in. It is a promise based upon class envy and populism, and it is a real job killer. The small business owner will not risk great amounts of capital unless the reward is also great. Therefore, most will simply downsize their businesses to the point where they have few or no employees, or they will just simply shut their business down completely. Now, the Bush tax cuts are expiring and there will be across the board tax increases on everyone. This will obviously not help the employment situation in the US either.
Mr. Wright also mentioned how the environmental movement has sabotaged energy production in the USA and has increased the risk to business by raising the cost of energy. Yet much of the current environmental pressure is focused on AGW (anthropogenic global warming), which is a hoax and based on counterfeit science.
Well, Mr. Wright, I for one have greatly benefited from this energy crisis because I’ve invested in Canada’s mid-cap (e.g., cpg, erf, nae.un) and junior oil and gas companies (mel, cta, psx, mox). Now that Obama has announced further plans to remove tax cuts from oil drilling in the US, we can expect the whole Canadian oil industry to take off, as long as nothing stupid is done on the levels of our provincial or federal governments here in Canada, such as cap and trade or carbon tax. (Perhaps the Luddites of the environmental movement want us to live as poor primitive peoples–but I’ve been to place where people live like that and I don’t know a single sane person who would ever choose to live like that.)
Posted by: pwdunn Feb 12, 06:52 AM
Mr Wright: I found your article riveting; I too have decided to shrug for 12 years now for two reasons: (1) Taxes in Canada are so high that my wife already works for all levels of government until June 11th or something like that [**actually June 17], and so why would I want to work for 6 months of the year for government as well? (2) I could teach at University level but I am neither black nor a woman, nor any other under-represented minority (actually I belong to an over-represented minority)–thought about changing my name to something Yupik, and I’d get a job in minute–but then who wants to be involved in higher education when the profs are hired on the basis of their gender or skin color. Not me.
More articles like this from business people would be greatly appreciate. Thank you American Thinker!