-
Farewell to the Spectator
December 16, 2011 | 8 comments
-
Tentative Praise for Ryan’s New Bipartisan Medicare Plan
December 15, 2011 | 3 comments
-
The Day Ahead: Thursday, December 15
December 15, 2011 | 0 comments
-
Examiner for Romney, National Review Against Gingrich
December 14, 2011 | 39 comments
-
Paul Ryan to Introduce New Medicare Plan with Democrat Ron Wyden
December 14, 2011 | 4 comments
The Spectacle Blog
U. Chicago economists Gary Becker, Steven Davis, and Kevin Murphy strike a Higgsian note in an op-ed in today’s Wall Street Journal:
We believe two factors are behind this rather tepid rebound…. The second factor is less obvious, but possibly also of great importance. Liberal Democrats won a major victory in the 2008 elections, winning the presidency and large majorities in both the House and Senate. They interpreted this as evidence that a large majority of Americans want major reforms in the economy, health-care and many other areas. So in addition to continuing and extending the Bush-initiated bailout of banks, AIG, General Motors, Chrysler and other companies, Congress and President Obama signaled their intentions to introduce major changes in taxes, government spending and regulations—changes that could radically transform the American economy.
Obviously Chicago free-market economists are not going to be on the same page as a Democratic administration. But note that they’re not criticizing Obama and co. for pursuing what they see as a flawed economic policies. Instead, they’re concerned about the timing scope of significant policy changes during a recession. That’s not Chicago economics — it’s regime uncertainty economics.
The authors give a laundry list of the administration and Congress’s unpredictable moves, and also include some evidence of the effects they are having on business:
A regular survey by the National Federation of Independent Businesses (NFIB) shows that recent capital expenditures and near-term plans for new capital investments remain stuck at 35-year lows. The same survey reveals that only 7% of small businesses see the next few months as a good time to expand. Only 8% of small businesses report job openings, as compared to 14%-24% in 2008, depending on month, and 19%-26% in 2007.
The weak economy is far and away the most prevalent reason given for why the next few months is “not a good time” to expand, but “political climate” is the next most frequently cited reason, well ahead of borrowing costs and financing availability. The authors of the NFIB December 2009 report on Small Business Economic Trends state: “the other major concern is the level of uncertainty being created by government, the usually [sic] source of uncertainty for the economy. The ‘turbulence’ created when Congress is in session is often debilitating, this year being one of the worst… . There is not much to look forward to here.”
In other words, how can businesses play the game when they don’t know the rules?
View all comments (11) | Leave a comment
More Blog Posts by Joseph Lawler
http://spectator.org/blog/2010/01/04/regime-uncertainty-a-certainty
Follow us:
ADVERTISEMENT
Current Issue
- The Demise of Money and Credit
- The End of the Castros?
- Peace in Our Times
SPONSORED LINKS
FLASHBACK TO: 1995
-
Pope Culture
A man of faith in a godless age is hitting Americans where it hurts.
-
Why the GOP Does Not, Like, Totally Suck
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
-
Dames at Sea
-
In the Absence of Guns
In Britain, defending your property can get you life.
-
The Metaphysical Martini
-
Counting the Costs of Clintonism
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
-
Chuck McHagel
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
-
The Legacy of Old John and Mother Fresh-Roasted
-
It’s the Best Time of the Year
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
-
The Bush Crack-Up
Was the President done in by the economy, or by the politics of the economy?
Clip of the Day
ADVERTISEMENT
Ken (Old Texican)| 1.4.10 @ 11:43AM
Mr. Lawler,
at last, someone hit the nail on the head with no quibbling.
Thank you.
JP| 1.4.10 @ 12:32PM
"In other words, how can businesses play the game when they don't know the rules?"
Simple, do one of the following:
1)Make a sizable donation to ACORN or the SEIU.
2)Make a sizable donation to the DNC and he "Relect Obama 2012 Campaign Fund"
3)Have your President or CEO write a flattering OpEd in a major magezine or newspaper that highlights our President's skill and genius.
4)Go Green.
Faffnir| 1.4.10 @ 3:43PM
Go blow.
Pingback| 1.4.10 @ 1:50PM
Twitter Trackbacks for The American Spectator : AmSpecBlog : Regime Uncertainty: A C links to this page. Here’s an excerpt:
JohnD| 1.4.10 @ 5:42PM
It is a fundamental principle of business that while businesses can survive wars, natural disasters, fires, floods, pestilence, epidemics, and even death if the business is in the form of a corporation, the one thing a business cannot survive is uncertainty.
If there is one reason why wealth is created in the U.S., and not in a country like Zimbabwe, it is that the U.S. has the Anglo-American system of jurisprudence, which, through the principles of due process and stare decisis produces predictable outcomes in resoloving disputes over contracts and property rights. Businesses can structure their relationships in a manner that is poredictable, based on existing legislation and the outcomes of fairly contested judicial descisions.
A practical example: A person wants to quit his job and form a business, so he mortgages his house to get the capital to start his business. The bank (mortgagee) takes the mortgage knowing they will either get repaid with interest, or they will go to court and be granted the collateral based on their security interest in the house (in fee simple determinable) that backed the loan. They can sell the collateral and be made whole, despite the borrowers (mortagors) default. They can thereby loan the money without assuming an undue risk, so they make the loan.
In Zimbabwethe same bank will not loan the money, knowing its security interest can be taken by force by armed thugs wiuth the regime's blessing. Therefore, no loan, no new business, no new jobs, no capital formation, no wealth creation.
By creating uncertainty, the Administration is stifling and risk taking, investment, and job creation. On top of that, it anti-consumerist policies, both enacted and pending (destroying the dollar, increasing the costs of energy and health care, higher taxes) have cut consumption and consumer spending, which is 70% of the U.S. economy.
There will be no recovery, there can be no recovery, until certainty is restored.
JohnD| 1.4.10 @ 5:43PM
sorry for the typos and fat finger errors
racking | 1.5.10 @ 9:38AM
http://www.racking-shelving.com
http://www.cold-store-equipment.com
as a whole contractor for cold store equipment, design, manufacturing, installation.
professional racking & shelving manufacturer, pallet racking, drive in racking,
cantilever racking, longspan shelving, dexion racking,
Pete | 1.5.10 @ 7:45PM
It's not only about not knowing the rules, its also about not being familiar with the game of recession. It can create false hopes in terms of business owners, and knock you off your feet when least expected.