It is an understatement to say that President Obama now owns the bad economy. He and his minions are actually creating and perpetuating it, policy by policy, decision by decision.
At an Aug. 4 press briefing, White House spokesman Jay Carney said: "The White House does not create jobs." That may be strictly true, but the guy who lives there can cause jobs to be lost and make the recovery more difficult — at which President Obama has excelled.
There is a fundamental principle that seems to have eluded the president and his men: A recovering economy that creates jobs needs to encourage innovation and the creation of wealth.
But often, Obama's policies and decisions have done the opposite. A few examples:
• The president's (and congressional Democrats') insistence on higher taxes is a job killer: Higher taxes make businesses unwilling to expand and consumers unwilling to spend. Many in the middle class already feel that taxes are extortionate.
• The president's arbitrary and on-again, off-again moratorium on oil drilling in the Gulf of Mexico induced many of the rigs (most of which were leased) to leave, causing a loss of both jobs and domestically produced oil.
• Along with profligate spending, excessive, unwise regulation has been the bete noire of the administration. Primarily because they have been populated with political hacks and yes-men, the EPA and FDA have been the worst among many offenders.
Heritage Foundation fellow Andrew Grossman has observed that the EPA forces businesses to "waste tens or hundreds of billions of dollars per year on environmental upgrades of dubious value (so) that money isn't available to invest in business expansions or create jobs. Higher costs also cut down on business investment — a factory that makes economic sense at a cost of $10 million may not when EPA regulations have jacked the cost up to $30 million."
Economic considerations are killing FDA-regulated industries as well. The developers of medical devices — which include some of the miracles of modern medicine: pacemakers, artificial joints, cardiac stents, scanners and radiotherapy machines — are being driven abroad.
For decades many devices have been approved via a fast-track pathway called 510(k), designed for products that are similar to earlier products, known as predicate devices.
Although the link between the new product and the predicate device can sometimes be tenuous, about 3,500 devices are approved annually via this mechanism, with very few problems.
The FDA has made it clear that qualifying for the 510(k) pathway will soon become more difficult and that more data will need to be obtained and submitted to regulators for the standard pathway.
These new requirements threaten innovation across the industry, especially at a time when financing is hard to obtain.
Unlike the drug sector, many device makers are small and financially fragile.
Medical device companies are voting with their feet. They have begun to move R&D and manufacturing abroad and even to write off the U.S. market for certain products that are so overregulated that financing for their testing is unobtainable.
Companies prefer to create jobs in Europe or Asia "for fear of getting lost in an FDA quagmire, a money pit that has driven many small companies to bankruptcy," according to Kenneth Abramowitz, a managing general partner at NGN Capital.
Reflecting that trend, an analysis by the consulting firm PricewaterhouseCoopers indicates that the U.S.' lead in medical device development (a $120 billion industry) is eroding.
In 2010, total venture capital investing across all sectors increased 19%, while investment in medical devices fell 9%.
The pharmaceutical industry is also beleaguered. Approvals are down, development costs are up, and regulators are so risk averse that financing drug development is difficult.
Dr. John Freund, who runs a venture capital firm specializing in biopharmaceutical drug and medical device companies, lamented that "the industry is increasingly turning away from developing drugs to treat diseases that millions of Americans have, such as diabetes, obesity and cardiovascular disease — at a modest cost per patient — because it has become nearly impossible to get them approved in the U.S. The FDA recently tightened the requirements to get new antibiotics approved, and the result will be that fewer drugs to treat deadly resistant bacteria will be developed in the future."
The president and his minions are going to learn some lessons the hard way.
First, that policies have consequences. In his study of the 1,000 years of the world's economic growth, the late British economist Angus Maddison observed that the "golden age" for worldwide growth was from 1950 to 1973, with per-capita GDP increasing 3% per year.
In 1973 growth slowed in Western Europe and Japan: "Some slowdown in these countries was warranted, but policy failings made it bigger than it need have been."
Second, that as my mother used to say, actions speak louder than words. Merely saying that you're not hostile to business doesn't make it so.
And although redistribution of income might satisfy liberals' desire for "social justice," it doesn't stimulate the economy or create private-sector jobs.
• Miller, a physician, is the Robert Wesson Fellow in Scientific Philosophy and Public Policy at Stanford University's Hoover Institution. He was a U.S. government official from 1977 to 1994.
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