I’ve been arguing for a while that “regime uncertainty” is stifling the economy’s ability to recover. Businesses are more reluctant to invest or hire when Washington pursues a policy agenda that could be detrimental to their bottom lines. The phrase was coined by economist Robert Higgs who observed that FDR’s anti‐business policies prolonged the Great Depression.
Unfortunately, the media has generally ignored the possibility that uncertainty being generated by the president’s policies has been contributing to the nation’s continuing economic problems. However, an editorial in yesterday’s Washington Post could be a welcome sign that the media is beginning to take notice:
But as analysts ponder the mystery of weak private‐sector hiring despite signs of economic growth, it’s worth asking what role is played by government‐induced uncertainty. With the federal government promoting major changes in health care, financial regulation and energy law, it wouldn’t be surprising if some companies are more inclined to wait and see than they might otherwise be. And that’s especially true when they look at looming American indebtedness and the effect that could have on long‐term interest rates.
The latest survey from the National Federation of Independent Business shows that big government remains the chief concern of the business community. When asked what their single most important problem was, 35 percent of small business owners cited “taxes” or “government regulations and red tape.” “Poor sales” was second at 30 percent.
The NFIB also cites uncertainty caused by Washington as a problem:
A huge help in moving toward a stronger economy for small business owners would be to “do no harm”. But Congress continues to pass and propose legislation that increases the cost of running a business and create huge uncertainty about future costs.
Only 3 percent of business owners cited finance as their chief problem. Yet, President Obama is pushing a $30 billion package to increase lending to small businesses. The business community doesn’t need more subsidized credit backed by taxpayers — it needs relief from the president’s agenda.