Why Can't Obama Do the Math On Jobs?

President Obama has a message for the U.S. Chamber of Commerce today: You have an obligation to start creating jobs. The government has done what it needs to do and any failure lies with the private sector.

Indeed, the job numbers are bleak. Unemployment fell last month, but only because Americans have given up looking for work in record numbers. On net, 319,000 quit looking for work and left the work force in December. In November, it was even worse, 434,000. Over 1.5 million American have left the workforce since August.

Just 36,000 net jobs were added in December. -- That is far fewer than the about 150,000 needed just to keep up with the growth in the population.

This is a strange "recovery." Recoveries almost always add people to the labor force. As more jobs open up, recoveries are supposed to mean that people who had previously left the labor force during the recession hope they now have a chance to get a job and start looking again. Thus, they officially rejoin the labor force.

It is simply unprecedented that 19 months into the recovery, more and more Americans keep on quitting the labor force. (Here is a diagram that compares the growth in the number of people "not in the labor force" during the recoveries that started in 1982 and 2009.) But to President Obama, the failure for this anemic job growth is clear. He believes that government programs have created the ideal conditions for economic growth, and any failure to create jobs is the problem of businesses.

In his weekly radio address on Saturday, after listing what he clearly regards as all the wonderful policies that were supposed to stir new investment and job growth, Mr. Obama added:

"Even as we make America the best place on earth do business, businesses also have a responsibility to America. Now, I understand the challenges you face. I understand that you're under incredible pressure to cut costs and keep your margins up. I understand the significance of your obligations to your shareholders. I get it. But as we work with you to make America a better place to do business, ask yourselves what you can do for America. Ask yourselves what you can do to hire American workers, to support the American economy, and to invest in this nation." Making "America the best place to do business," in Mr. Obama's perspective, refers to the many wonderful economic interventions his administration has implemented.

In his speech on Saturday, he mentioned subsidizing the research in green energy. To "win the future," we just need to make "more efficient lighting and windows to heating and cooling...make buildings more energy-efficient... making windows and insulation and buildings that save more energy."

This is the arrogance of socialist central planners: Obama believes he and his administration know better than individual companies how they can earn the most money.

He bragged about how the government's support to provide "some tax credits and financing opportunities" has created jobs. And, yes, heavy subsidies are surely needed to induce firms to get into the otherwise unprofitable green energy projects. But at the cost of losing more productive jobs in other places. His speech today had its own list of government-led investments.

Mr. Obama has long demonized insurance companies, claiming the profit motive causes doctors to unnecessarily amputate patients' feet. He has blamed the financial crisis on greedy banks and ascribed almost every other problem -- from Chrysler's bankruptcy filing to higher oil prices -- to greedy speculators. Today he talked of how government must protect Americans from "harm or exploitation" by businesses. His regulations have tried to "fix" this problem of greed. He is now appealing to businesses' civic duty to create jobs for the good of the nation. President Obama might deny that he is a socialist but that is the logical end result of many of his current policies.

Take the pharmaceutical industry. A decade-and-a-half ago, U.S. pharmaceutical companies were the envy of the world, turning out one life-saving drug after another. But recently the development of new drugs has stalled. According to The New York Times, these companies simply no longer have the "will" to develop new drugs, -- as if the companies have simply gotten lazy. The real culprit has been the constant threat of price controls and the FDA's lower approval rates and longer approval lags. Who wants to bear the huge development costs for new drugs only to face price controls that could deny companies the ability to recoup those costs?

Obama's solution has been a move to encourage the government entering the drug development business. But do we really believe that taxpayer money is going to be more efficient at creating new drugs?

As further evidence shows that Obama doesn't understand what drives businesses, his promise in his speech today to push for corporate profits being "shared by American workers" is just another way of increasing taxes. American companies already face the highest corporate tax rates in the world.

In addition, Obama disconcertedly denied ever raising in his pre-Super Bowl interview with Bill O'Reilly last night: "Absolutely. I didn't raise taxes once." Possibly the president ought to talk to his own Department of Justice, which is arguing before federal courts around the country that Obamacare does impose taxes on individuals.

The president is clueless about how the economy actually works. With doling out federal grants here and there to selected sectors or firms, he may selectively create incentives for growth, but he fails to understand the entire picture: the money has to come from someplace and it is impossible to subsidize the entire economy. Putting money into projects that cost much more than they create is a recipe for destroying wealth.

As he prepares for his 2012 re-election campaign, Mr. Obama has developed a sudden admiration for President Reagan. But the contrast in views could not be greater: Reagan viewed the private sector as the engine of innovation and growth, that removing regulations and special incentives would let companies focus on the best places to invest. Firms won't create jobs out of some civic duty. An infinite number of speeches telling companies to create jobs will never fix the problem.

John R. Lott Jr. is a FOXNews.com contributor. He is an economist and the author of "More Guns, Less Crime (University of Chicago Press, 2010), the third edition of which was published in May.".