How to put Americans back to work? REPEAL THE BIG 3: Obamacare, Dodd-Frank, and Sarbanes-Oxley
During a recent interview I was asked “what concrete steps I would take to help the Job creation?” My Answer: 1) REPEAL Obamacare, 2) REPEAL Dodd-Frank and 3) REPEAL Sarbanes-Oxley.
Yes, Lowering and simplifying our tax rate and reducing government deficit spending will all enable a PRO-GROWTH agenda, but the repeal of the BIG 3 JOB KILLERS will be like gasoline on a fire. Repealing the Big 3 will put America back to work.
“The U.S. has lost more than 10 million jobs because of lost IPOs since the '90s. Nobody who looks at our feeble IPO figures in the last decade should be surprised by the tepid job growth that has characterized the last two economic "recoveries." (contd. below).
All of these thousands of pages of regulation have a terminal effect on our economy and many are well documented. Obamacare with its 150 new agencies, panels and taxes – a mountain of bureaucratic uncertainty, Dodd-Frank and the onerous lending restrictions, and Sarb-Ox…Below, I will focus here on the least understood of the 3, Sarbanes-Oxley.
The following are articles specifically on the damage Sarb-Ox has done to American businesses to the tune of 10 million jobs. This is an issue that has bi-partisan agreement as you will note from some of the contributors below.
“The facts are sobering. The U.S. has experienced a stunning decline in IPOs and stock listings while capital markets in Asia, Europe and South America have thrived. Data from the World Federation of Stock Exchanges show that the number of U.S. IPOs has dropped to only about 100 annually, compared to about 360 a decade ago. In just 15 years, listings on U.S. exchanges dropped from 8,800 companies to under 5,000. Meanwhile, listings on major overseas exchanges doubled. Fewer than 10% of all global IPOs list on U.S. exchanges today, compared with 48% in the late 1990s.
Why does this matter? After going public, many new companies typically experience rapid investment and job creation. In fact, 92% of a typical company's employment growth occurs after the IPO. But if entrepreneurs and investors cash out of an emerging company by selling to another firm, job creation often sputters or contracts. By some estimates, including a study prepared by Grant Thornton LLP, the U.S. has lost more than 10 million jobs because of lost IPOs since the '90s. Nobody who looks at our feeble IPO figures in the last decade should be surprised by the tepid job growth that has characterized the last two economic "recoveries."”
“… the most damaging action of the Enron affair occurred in the aftermath of post-Enron reform. This would be the Sarbanes-Oxley Act of 2002. Ten years later, even the Obama administration agrees that Sarbox’s crushing burden of accounting mandates is holding back economic growth.
And Sarbox has little to show in results for investors, having failed to stop Lehman Brothers, Countrywide and now MF Global, which was run into the ground by a former politician who had championed the 2002 law. Jon Corzine’s bio on the website BigThink.com states glowingly, “As a member of the United States Senate, Corzine co-authored the Sarbanes-Oxley Act, a piece of legislation designed to crack down on corporate malfeasance crafted in the wake of accounting scandals surrounding Enron, Tyco, WorldCom, and other major corporations.”
Yes, it turns out Corzine may have been more of an expert than we thought on alleged “corporate malfeasance.” And as noted in the October report of President Obama’s Council on Jobs and Competitiveness, Sarbox has crushed the dreams of thousands of honest entrepreneurs for every scandal it may have stopped (and I don’t know that it has stopped any.)
Pointing out that “the data clearly shows that job growth accelerates when companies go public,” the Obama jobs council noted with dismay that there were fewer U.S. venture-backed initial public offerings (IPOs) in 2008 and 2009 than in any year since 1985. As I have noted previously, the data also show that even the recession years of the early ’90s had more IPOs than any year since Sarbox went into effect…”
“There has been a significant decline in the number of IPOs since the beginning of 2008. This decline is the result of an investor flight to quality, the credit crunch, and the disproportionate impact of the Sarbanes‐Oxley Act on emerging and high growth companies. The IPO drought is in turn creating a capital market crisis for high growth technology companies, causing many companies to slow growth and tying up significant amounts of risk capital that the economy needs to be reinvested. The government must address these problems because the lack of IPOs has had the most impact on the very companies that have led the growth of the American economy, represent a significant portion of US exports, and are critically important for America’s world standing.”
“Appearing on CNBC's SquawkBox earlier this morning, Andreessen told CNBC that The Sarbanes Oxley Act is “effectively killing tech IPOs.” By imposing inordinate liabilities and resource allocation on public companies, he said the Act is forcing promising Silicon Valley companies to remain private as long as they can, so that their capital can be focused on areas core to their growth.
The Netscape co-founder said that he understands, and agrees with, the principal role of the act to prevent Enron-type fraudulent activity. However, he points out that none of the culprits that resulted in the institution of the Sarbanes-Oxley act emerged from Silicon Valley. He believes the broad-based regulation is, in essence, an indiscriminate hammer on companies whose intent of going public is far from defrauding investors.”
“Back in 1971, there was a small technology company that was unprofitable on an operating basis. It was only three years old when it went public at an IPO value of roughly $8 million—roughly $44 million in today's dollars.
It created a revolutionary product: the first commercially available microprocessor chip. After it went public, it actually missed its first delivery date and investors cut its stock price in half. Talk about risk. That kind of company wouldn't even make it to the IPO stage in today's unforgiving market.
The name of that company? Intel. Hopefully Paul Otellini, its president and CEO, and a member of the jobs council, will keep that in mind as talks continue...”