Kevin Drum et alia are mystified – just mystified – about why it is that business isn’t more…upbeat.
Why does the economy continue to suck? The LA Times is hosting a symposium on the topic today, and USC business professor Ayse Imrohoroglu says the answer is uncertainty:
Businesses don’t know what will happen to interest rates. They have trouble calculating what new workers will cost in light of potential new healthcare mandates and costs. They don’t know what will happen to tax rates, which could rise dramatically. They are uncertain about increasing financial regulation and the possibility of a carbon tax. And as if that isn’t enough, the soaring deficits and national debt raise very real questions about the federal government’s long-term ability to meet its debt obligations.
I’m kind of amused that the progressive, Keynsian bloggers are baffled by why business is so…po’ mouthed…these days. Here’s Keynes:
“Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.”
Business is moody. Consumers are moody. They’re moody for a reason, to be sure…and I get it that the left wants to claim that government has no part in the uncertainty. But that just makes no sense. People don’t parse the regulatory environment from the general environment, and they look, above all, to the government for leadership.
We’re pack animals, and our moods are communal. Given that, I don’t know how it is that Kevin gets to this:
The uncertainty meme is just mind boggling. Businesses always have a certain amount of financial and regulatory uncertainty to deal with, and there’s simply no evidence that this uncertainty is any greater now than it usually is. (It is, of course, entirely believable that business owners who spend too much time watching Fox or reading the Wall Street Journal editorial page might believe otherwise, but that’s a whole different problem – and one that Imrohoroglu should spend his time debunking, not promoting.) The only significant real uncertainty that American businesses face right now is uncertainty about whether there’s enough customer demand to justify hiring more workers and buying more equipment.