Is the IFA Correct About Employment VS Commercial Loans?

Despite what many politicians have led us to believe, jobs are created in the private sector, not the public sector. In fact there is a direct correlation to the number of jobs in the public sector to those in the private sector. That is to say when there are more people working for the government,…

Despite what many politicians have led us to believe, jobs are created in the private sector, not the public sector. In fact there is a direct correlation to the number of jobs in the public sector to those in the private sector. That is to say when there are more people working for the government, there is less economic activity going on in free enterprise. I have many theories about this myself and many free-market economists believe it has to do with the business cycle, but I believe that the more people who work in the bureaucracy, the more rules and regulations are compounded upon businesses thus, causing the private sector to hire fewer people.

Indeed, I would point to ObamaCare and such things as a greater growth of the bureaucracy causing many business owners not to trust the future of the economy, and when there is a low business confidence, there are fewer jobs created. So I have a question to ask you, let's do a pop quiz;

Where do jobs come from?

Well, jobs come when new businesses start or existing businesses expand in the private sector or government sector, but as I said before too many jobs being created in the government sector will decrease the number of jobs created in the private sector. Okay I'm glad to see we got that straight.

For businesses to expand, often they need increased capital, and sometimes they get this money by borrowing it from commercial banks and taking out commercial loans. Of course, no business owner in his right mind would borrow money if they are unsure about increased future regulations in their industry, or the strength of the economy moving forward.

Not long ago there was quite an interesting article in the American Business Journals titled “Oversight Eyed for Consumer Protection Unit” by Kent Hoover posted on March 25, 2011 and in this article it stated; “A shortage of financing for franchised small businesses could cost the economy 80,000 new jobs this year, according to the International Franchise Association [IFA].”

It is my contention that 80,000 new jobs this year in franchise companies due too hard to get loans is quite the underestimation. For instance, McDonald's alone said it would hire 500,000 people in the next year, and that is one company. If all the franchisees that are in existence, and all the new franchises that may start suddenly got the loans they needed, providing there were people who were confident about the future of our economy enough to take out those loans; it could easily result in 4-6 million jobs in 2011 (only in the franchising sector).

Therefore is much as I would love to plug the International Franchise Association right now because I do believe it's a solid organization, but I think they are totally off on their calculations, and believe they are correct, but the number is much, much higher. Indeed, I hope you will please consider all this.