On Tuesday, Peter Schiff testified before a Congressional committee about ways to increase job creation in the economy. His message, while not popular with many politicians, was loud and clear; Get the government out of the way. True to form, Peter explains the true root of the problem in terms so clear and simple, that even a Congressman could understand them.
One thing I found interesting is that in the five person panel that testified, only Peter was actually a businessman who has to hire people in the real world. The other four people were academics who base their opinions on charts, studies, and economic theory.
In his testimony, Peter explains how government stimulus, such as President Obama’s new “jobs bill” or President Bush’s tax rebate stimulus package, simply diverts capital from one segment of the economy to another while running up the debt and adding a layer of bureaucracy. He explains the motivations behind an employer’s decision to hire an employee and how the government has made hiring someone “one of the riskiest things you could do in America.” He explains how artificially low interest rates are hindering capital formation necessary to increase production. But enough of my blabbering; watch it straight from Mr. Schiff below.
If you only have a few minutes, definitely watch his opening five minute statement and the last two minutes of part 2.
The example of Henry Ford cited in the last few minutes of the video sums up the situation perfectly. In 1914, Henry Ford was able to pay his factory workers $5 a day or the equivalent of $125,000 a year today; and that was with zero income taxes or payroll taxes. He paid the highest wages in the world and sold his cars for the lowest price. But how is that possible? It was possible because the government was tiny, regulations were minimal, taxes on business were low, savings and capital was available to increase productivity, and employers didn’t fear getting sued at every turn.
The most liberal guest on the panel, Dr. Boushey, unwittingly proved Peter’s point about the worker/employee relationship; namely, that in a free market without regulations and unions, employers will pay fair wages and aim to please their workers, or face losing them to the competition. As Dr. Boushey points out, Henry Ford paid those high wages “to reduce turnover and keep highly skilled workers,” not because of union demands.
For those of you who are sadistic enough to watch the entire two hour hearing you can find it here.
If you want to read Peter’s written statement to Congress which supplements his testimony you can find it here.