Liberal economic commentators such as Paul Krugman and Brad DeLong are positively gobsmacked by a new study from the Economic Policy Institute. It purports to show that business uncertainty is, in fact, not slowing the U.S. economic “recovery.” The gist from EPI:
An examination of current economic trends, and especially what employers are doing in terms of hiring and investment, debunks this story about regulatory uncertainty as the cause of our dismal job growth. An examination of what employers and their economists are saying again and again in private surveys (cited later in this paper) makes it clear that what businesses actually identify as their challenges does not fit this story either. In other words, what the heavily politicized trade associations in Washington (like the Chamber) are saying does not correspond to the real challenges facing both large and small businesses, even as they themselves perceive them.
EPI points out, for instance, that a recent survey of small businesses found “poor sales” to be their single-most commonly cited problem. So time for Uncle Sugar to borrow/spend more money pumping up consumer demand, right? Maybe not. While it’s true that 25 percent blamed “poor sales,” 37 percent blamed either regulations (19 percent) or taxes (18 percent.)
Another piece of EPI evidence: Private sector employment is up 1.1 percent during the 25 months of this recovery vs. a 0.6 percent drop during the “jobless” recovery following the 2001 recession. But go ahead and contrast the Obama recovery, instead, to the Reagan recovery where private sector jobs grew 9.9 percent during its first two years. One difference then: taxes and regulation were on a pro-growth trajectory—unlike today. (EPI credits Fed easing rather than Reaganomics.)
Maybe EPI should run its own survey and ask entrepreneurs whether they would like to operate in an economy where government spending was running at 28 percent of GDP, revenues 24 percent, and big budget deficits extended as far as the eye could see. That is, by the way, exactly the fiscal scenario EPI recently concocted.
I’m pretty certain of how business would answer.
Better say nothing than to embarrass yourselves further. When your premise is weak, state it and change the topic. Sticking around to debate it is a losing proposition.
Damn, are there any intelligent conservatives out there? They certainly don’t seem to be hanging out and writing for AEI.
The reply to this lameness from AEI is here:
http://www.epi.org/blog/regulatory-uncertainty-response/
Before we go any further please explain how cutting taxes will reduce the deficit.
Since we are concerned about reversing the decrease in employment since the onset of the Great Recession in 2007, it should be enlightening to see the changes in the reasons given for not hiring. The EPI survey shows that the mention of taxes rose from roughly 19% to 21%; mention of regulation rose from roughly 10% to 14%, but mention of poor sales rose from about 13% to 30%. What does the suggests is the greatest cause of the change in hiring outlook?
But there is another valuable insight to draw from the EPI data. From the first to the second Reagan Administrations the mention of regulation increased from roughly 7% to 12%. Did President Reagan become distinctly more pro-regulation in his second term? It seems unlikely. More likely, his, and others, constant speaking on the issue brought regulation to the consciousness of employers – just like constant repetition now by the AEI, US Chamber of Commerce and Republican leaders has put regulation on the minds of many business people. Given the incessant hectoring by these forces, the 4% increase in the mention of regulation since the 2nd Bush administration probably means nothing except that the propaganda campaign has been effective. (It is less than the increase from Reagan 1 to Reagan 2 after all.)
That’s it? That’s the response?
Not including the fact that this didn’t even mention the second survey of businesses that found:
The “math” that AEI uses of Taxes+Regulations is completely useless because Poor sales+taxes = 43% of businesses compared to 19% for regulations.
Stay classy, AEI.
But how do you explain the evidence in two recent working papers explicitly analyzing the effect of policy risk on the business cycle? Both provide scientific evidence against the popular claim that political uncertainty matters a great deal.
In a recent paper (http://ideas.repec.org/p/bon/bonedp/bgse06_2011.html) Born and Pfeifer find that a two standard deviation policy risk shock decreases output by a mere 0.02%. While they find considerable evidence of policy risk in the data, they show that the “pure uncertainty”-effect of policy risk is unlikely to play a major role in business cycle fluctuations.
Fernández-Villaverde/Guerrón-Quintana/Kuester/Rubio-Ramírez (http://www.econ.upenn.edu/~jesusfv/fiscaluncertainty.pdf) study the same issue. While they give their results a somewhat different spin (the narrative of uncertainty being the main culprit just sounds too nice), in their baseline case fiscal uncertainty is responsible for a peak output drop of 0.03%.
Both studies clearly indicate that the case for political uncertainty as a major drag on the economy is overstated. Hence, politicians in D.C. should focus on the real issues.
Tyrone Harvey
AMERICAN ARE UNCERTAIN NOT THE RICH AND THE SUPER RICH
Uncertainty is a word that Republican have been throwing out constantly about American businesses ! Republican state that the main reason American businesses that are sitting on 4 trillion dollars in profits! And not hiring is because American businesses are uncertain about the economy! TOTAL LIE! Republican really are helping American businesses keep their profits and invest their money oversea! Many Republican are getting big money from American businesses! American Businesses could careless about America nor American or the American economy! THEY CARE ABOUT MONEY……KEEPING THEIR MONEY!
Now the real Americans that have a right to be uncertain are Americans receiving “Social Security” “Welfare” “Unemployment” “Military Pay”. Or any American working for the “Government” or the “Private Sector”! American businesses have worked 16 hour day and the next day without notice shut their doors! Leaving American workers unemployed and or in needs of government assistance! Then Republican like Newt Gingrich criticize those American demonize those American claiming it’s their fault. Or that their children will now be prostitute and pimps or some kind of criminals!
The fact is Republican policy of the past and present has allowed many American go from middle-class to dirt poor in need of Government Assistance! It’s no wonder the Republican ex-Senator Phil Gramm from Texas once called us “a nation of whiners”. Maybe he’s right. Every time I hear these rich Republicans bitch and moan and groan and whine, I always feel obligated to post a “counter-whine” in my post. Democrats in Congress have scored plenty of political points with attacks on the wealthy. And now some Republicans are going after government benefits for rich people, too, though a lot more gently, Politico reports.“We need to quit providing quite so many benefits to people who don’t need them,” Texas Republican Sen. John Cornyn, chairman of the National Republican Senatorial Committee, told the news service.
Sen. Tom Coburn, R-Okla., and Rep. James Lankford, R-Okla., have introduced bills to prevent millionaires from receiving unemployment insurance. Coburn also wants to reduce farm subsidies for the wealthy. Coburn says government data show that that millionaires garnered more than $18.6 million in unemployment benefits in 2008, and rich farmers took home $49 million in subsidies. Now don’t think Republican are now more understanding of fairness! When they introduce a bill to get rid of subsidies . It is attach with garbage they know WILL NOT past!
Members of Congress had a collective net worth of more than $2 billion in 2010, a nearly 25 percent increase over the 2008 total, according to a Roll Call analysis of Members’ financial disclosure forms. Nearly 90 percent of that increase is concentrated in the 50 richest Members of Congress. Two years ago, Roll Call that the minimum net worth of House Members was slightly more than $1 billion; Senators had a combined minimum worth of $651 million for a Congressional total of $1.65 billion. Roll Call calculates minimum net worth by adding the minimum values of all reported assets and subtracting the minimum values of all reported liabilities.
According to financial disclosure forms filed by Members of Congress this year, the minimum net worth in the House has jumped to $1.26 billion, and Senate net worth has climbed to at least $784 million, for a Congressional total of $2.04 billion. CONGRESS IS NOT UNCERTAIN THEY ARE GETTING PAID……..LEAVING THE MIDDLE-CLASS AND THE POOR TO FIGHT EACH OTHER!!!!!!
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