Tuesday, October 04, 2011

Employment and the burden of government

Bruce Barlett devotes a blog post to making the case that Republicans are completely off their rocker in asserting that excessive government has contributed to the current malaise in employment. Bartlett cites comments by Rep. Eric Cantor as typical of GOP thinking:
“By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers,” Mr. Cantor said.
Bartlett then counters with the following chart, which uses BLS survey data from businesses on reasons for layoffs:

(click to enlarge)

Case closed, right? Not exactly. Cantor, along with most people who decry the costs of government regulation, specifically said that regulation was a reason why companies weren't hiring, not a reason why they were laying workers off. There is data to support this line of thinking, such as this US Chamber of Commerce poll of small business owners which found that 34% cited uncertainly over actions by Washington as serving as a primary or secondary obstacle to hiring, with 19% specifically mentioning regulation. 

By highlighting layoffs, Bartlett is essentially comparing apples to oranges. 

He then, rather bizarrely, cites this graph as further evidence that the regulatory uncertainty argument is a distraction:

(click to enlarge)

Note that taxes and regulation -- i.e. the burden of government -- combine for 34.7 percent of responses and constitute the single most important problem faced by small businesses, topping poor sales by 5 percentage points. And yet Barlett is dismissive -- did he not study his own graph? And remember, this is only a survey of the single most important problem -- how many other business owners who cited poor sales as the primary factor would also place taxes or regulation in their top three?

In effect, Bartlett is attempting to spin a tale for which there is precious little evidence in support. 

Related: Previous Bartlett criticisms here.

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