Uncertainty…Not! Part 2

October 24th, 2011 at 4:47 pm

This piece, by the Asst Sec’y for Economic Policy at the Treasury Department, Jan Eberly, is, along with Larry Mishel’s work on the issue, the best refutation of this persistent talking point that “regulatory uncertainty” is what’s holding back job growth as opposed to…um…customers, aka demand.

Eberly provides a plethora of evidence:

–work hours: if demand was in place but uncertainty was a factor, you’d see extended hours of the current workforce vs new hires (growing demand would push employers to raise hours; nervousness re regulatory agenda would dampen hires.

–corporate profits: they’re kind of the bottom line, and they’re up a lot.

–investment: Like Larry points out, it’s significantly outpacing overall economic growth; “uncertainty” would be pushing against this trend if it was a major concern.

–corporate bond yields are low across all industries (Eberly reasonably suggests that industries facing regulatory uncertainty should stand out as having to offer higher yields to offset uncertainty risk…though I guess the uncertainty freaks could tell a story about pervasive uncertainty across all industries—OK, then all bond yields should be higher, right?)

–survey results, from actual business folks themselves!

“In recent surveys, business owners and economists do not list regulation as the main problem facing their businesses, nor do they blame regulation for job cuts:

  • In the September survey of small business owners by the National Federation of Independent Businesses, more than twice as many respondents cited poor sales (29.6 percent) as their largest problem than cite regulation (13.9 percent).
  • In an August survey of economists by the National Association for Business Economics, 80 percent of respondents described the current regulatory environment as “good” for American businesses and the overall economy.
  • As noted above, in a recent Wall Street Journal survey of economists, 65 percent of respondents concluded that a lack demand, not government policy, was the main impediment to increased hiring.
  • According to data from the Bureau of Labor Statistics, less than three-tenths of 1 percent of mass lay-offs in the second quarter of this year were due to government regulations or intervention.”

I don’t like to tout results from convenience surveys unless they’re instructive, as I think this one is.  I always make a point of talking to business folks I encounter about these questions of regulation, taxes, and policy uncertainty.  They never say a thing about health care reform or the EPA (and they always complain about lack of customers).

They do, however, often complain like Hell about unemployment insurance, OSHA rules, ADA regs, and “arbitrary” discrimination suits (their words, not mine).  Unions, some but not so much.  Actually, they complain a lot more about being squeezed by their health care provider than by the union.

Of course, these are all constants…they have little to do with President Obama’s agenda.

Final thought: clearly, the uncertainty theme has worked for the right because a) it sounds plausible, and b) they incessantly repeat it and it is echoed by their media.

So, should not progressives learn a lesson here?  I nominate “middle-class squeeze.”

It’s plausible and unlike the uncertainty meme, there’s truth to it.  As long as the broad middle class is struggling, demand will remain weak, robbing business of customers and investors of confidence.  If we don’t solve the middle-class squeeze the economy will remain stuck…etc, etc…

I know: this becomes “only through reducing uncertainty can we release the squeeze on the middle class!”

More work to do here…


Print Friendly, PDF & Email

5 comments in reply to "Uncertainty…Not! Part 2"

  1. Tom says:

    Confidence is supply side, you need your phrase to be clearly demand side, perhaps it needs the word demand in it:

    Middle Class Frozen Demand

    But it really all goes back to dept burden, so what about:

    Middle Class Debt Squeeze

    Harder to claim gutting EPA regulations can fix that.

  2. urban legend says:

    OWS should spin off 100 or 200 to demonstrate in front of NYT, WaPo, NBC, ABC, CBS, CNN (don’t bother with Fox, not worth it, not a news outlet) — with the basic question: why won’t you do your jobs? And name names — big pundits and reporters, editors, publishers, even board members — and be ready with hand-outs of examples of poor journalism. One example: recent refusal to say, at least in headlines, that it is overwhelmingly Republicans who are killing the jobs bill by filibustering it. How about the almost universally cavalier attitude about huge unemployment, as opposed to phony worry about the deficit? Use Media Matters to come up with scores of examples, and try to embarrass the hell out of the culprits, who presumably were taught better in J-school.

  3. jo6pac says:

    they have little to do with President Obama’s agenda.

    I’m not sure what that is but yes nothing but lies. My friends that own small business need customers, reg aren’t the problem. The part I love is most regs are written by lobbist of large corp. to shut down the little business person. Check history after ww 1 and you’ll see how corp amerika wrote the rules of how/what the govt regs would be to max profits for themselves and take out the little person.What a great country and the only way out of the mess is take the money out of elections and ban lobbist, I won’t live to see the day.

  4. dpeterka says:

    Pose the following to your favorite Republican:

    Name just one regulation that Obama has put into place, describe and cite evidence of the uncertainty it has created, then tell us how many jobs will be created by its repeal.

    Seems simple enough, don’t know why the media won’t do it.

  5. Tim says:

    I am not sure there’s much to be gained from debunking (at least, when it is not on the airwaves) such obvious junk economics. The uncertainty claim has so clearly been used to further the goals of dismantling worker’s rights and ecological protections.

    Perhaps there are more worthy areas to focus on?