I've Been Warning About This
Meddle in the economy too much, and investment dries up as entrepeneurs sit on the sidelines to see what's next:
"America isn't hiring precisely because of government policy. Small business owners, who are usually the first into and the first out of the job pool, are standing by the fence and watching. They are paralyzed by regulatory uncertainty. If they hire someone who ends up doing poorly, will they be able to fire that person? Will they have to pay their health care bills after they've been terminated? If so, for how long? Who will pay for all these stimulus checks? If it will turn out to be small business, why would they hire instead of keeping costs low to prepare for the big tax bill? Where will the market move? Are you in the right business or are your clients in a politically disfavored industry? . . . Jobs aren't languishing despite the government's best efforts. They're languishing because of them."
Mesa Econoguy:
Regime uncertainty.
The real danger here is that additional uncertainty, i.e. threatened increased government intervention beyond what we've seen already, becomes a self-fulfilling prophecy in which government effectively assumes control of the financial sector, is actively talking about same in medicine, and a variety of other areas.
The more areas into which government moves (because it sees an opportunity or is effectively forced to do so), the more private enterprise will leave those areas, productive capital will dry up or flee, etc.
Austan Goolsbee has no clue about this, Jared Bernstein is unfamiliar with this concept, and I'm damn sure Rahm Emanuel knows nothing about this (or anything else).
July 2, 2009, 7:17 pmthreecollie:
Stimulus checks here in our county appear to be going to paint a couple of bridges. (I hope they use real bright colors so we can get real stimulated, because that is about it.) Meanwhile I am cringing in horror at the thought of being forced to either pay for health insurance or be fined for not buying it.
July 3, 2009, 3:25 amWe used to have insurance.
Small business=self insured.
When the economy went south along with ALL our profits, we let it go so we could eat. Guess we will have to give up eating when the health care bill passes. At least that will be good for the obesity "epidemic".
Larry:
Excellent observation. If you harken back to Rev Ruling 96-8, which had to do about how pension plans were to be treated relative to conversion to a cash balance plan, you will discover that many plan sponsors relied on this revenue ruling which was NEVER finalized. This lead to nearly all of the litigation on pension plans in the early 2000's including the landmark IBM case.
July 3, 2009, 9:04 am