Uncertainty Is Not the Problem It's the bad policies we have.

Wall Street Journal ^ | June 14 2011 | By CLIFFORD S. ASNESS

[NoLibZone]

Many commentators blame our continuing economic woes on "uncertainty." They allege that recent and anticipated dramatic policy changes make business planning difficult, and that this is retarding growth and employment. This view is not wrong—but our main problem is not the uncertainty surrounding new policies. It is the policies.

Consider two uncertain situations. In the first, our business is waiting to find out the location decision for a customer's new industrial plant, so we know where to build our new supply facility. Until this is resolved, we will not invest in building nor will we hire staff. In the second situation, we know we are in for some pain, someone is going to make our business less productive and profitable, but we do not yet know how much. Planning is marginally more difficult, but the main reason we will not grow in the second situation is that investment is less attractive regardless of the precise resolution of uncertainty.

In the first case, uncertainty is the obstacle. Once it is resolved, we invest. In the second case, uncertainty is a small part of the problem. The large part is simply that bad things are happening. The day we are told "well, it's exactly a 30% hit to productivity and profits," all uncertainty is resolved—yet we will still not invest or hire.

The Obama administration's economic policies have defenders. For instance, New York Times columnist Paul Krugman will tell you the stimulus helped, and we didn't have enough. I disagree. I will tell you the stimulus was wasteful and politicized, and the American people, not being idiots, know they will have to pay for it eventually. People adjust their plans to account for the additional debt heaped on them, meaning lower investment and consumption.

[PGalt]

It is the policies.

It's the socialism, stupid. DEFUND socialist collectives foreign and domestic. The U.S.A. becomes financially solvent and we become very low-taxed prosperous/productive citizens in a country which acts as a beacon for individual liberty.

[Graneros]

“DEFUND socialist collectives foreign and domestic.”

Brief and right to the heart of the matter. I like it. With one short sentence you have solved 90% of America’s problems.

[griswold3]

“The Obama administration’s economic policies have defenders. For instance, New York Times columnist Paul Krugman will tell you the stimulus helped, and we didn’t have enough. I disagree. I will tell you the stimulus was wasteful and politicized, and the American people, not being idiots, know they will have to pay for it eventually. People adjust their plans to account for the additional debt heaped on them, meaning lower investment and consumption.”

THIS is what i’ve been saying all along. Businesses know the bill will come due like a balloon payment to the bank. That’s why they are hoarding cash. Hopefully they’ll make it out alive. The government will become hungry for cash. (Michael Moore-’We’re not broke.’) It’s a survival game.
(There are multinationals that have benefitted from the decline in the dollar. But that is another subject.)

“What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not that his plans may be rendered unlawful before they can be executed?”

James Madison.

“American businesses have no confidence that their government won’t do something really stupid, Isaac says” Former FDIC chairman 1981-1985

[familyop]

De-fund and close all intrusive regulatory and social offices, federal and local. Cut government incomes from all who have the money and time to bug their neighbors with legalistic nonsense. ...problems solved.

[PGalt]

Thanks much Graneros. I have given that years of thought.