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…