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Monday, October 10, 2011

The "Uncertainty" Lie

Oct 10th, 2011

To hear the Republican party's current ranking members tell it, everything wrong with the American economy stems from "over regulation." This has created too much "uncertainty" and is the reason the engine of job creation has collapsed.

In particular, House Majority Leader Eric Cantor's (R-VA) entire economic message is based on this premise. A few weeks ago, he repeated his position, "By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers."

There are more examples of this nonsense HERE, HERE and HERE.

Most experts have been growing increasingly annoyed listening to this skipping record. You don't have to be an ardent Keynesian to understand that the problem starts with demand. Lawrence Mishel of the Economic Policy Institute recently observed:

"There is a ... story, widely told by Republican politicians and business trade associations, which claims that business investment and hiring is being held back by uncertainty over future regulations and taxation. As Maine Senator Susan Collins said in introducing her bill to put a moratorium on all new regulations: “Businesses, our nation’s job creators and the engine of any lasting economic growth, have been saying for some time that the lack of jobs is largely due to a climate of uncertainty, most notably the uncertainty and cost created by new federal regulations” (Kasperowicz 2011). Her view has been repeated by others, including House Majority Leader Eric Cantor (2011) and the Chamber of Commerce (Donohue 2011)."

Is it true? Are America's businesses desperately crying out against "regulation?" 

In a word, "NO." 

As it turns out, not only is it provable that this is bullshit but, even better, it is former Reagan aide and stalwart conservative economist Bruce Bartlett who has done just that.

"Evidence supporting Mr. Cantor’s contention that deregulation would decrease unemployment is very weak. For some years, the Bureau of Labor Statistics has had a program that tracks mass layoffs. In 2007, the program was expanded, and businesses were asked their reasons for laying off workers. Among the reasons offered was “government regulations/intervention.” There is only partial data for 2007, but we have data since then through the second quarter of this year.

The table below presents the bureau’s data. As one can see, the number of layoffs nationwide caused by government regulation is minuscule and shows no evidence of getting worse during the Obama administration. Lack of demand for business products and services is vastly more important."

Here is the same data from the BLS crunched by the EPI in the form of a graph.

I have opined in the past that this "uncertainty" meme is not only dishonest, it is actually anti-Capitalist.

What the GOP has been arguing in favor of over the last decade is not unfettered markets. They want to rig the game, not set it free.

Pure Capitalism is built on the concept of accepting risk.

Today's Republicans are stipulating that there should be little or no risk.

They are determined to shield capital investors from the consequences of stupid or even dangerous decisions. Their message and their mission is to eliminate responsibility.

The sick irony, now that they also have declared that "corporations are people," is that they are actually doing what they have been arguing "liberals" have been trying to do for the last two generations.

The GOP is actively conferring victimhood on a group and trying to confer special rights and a special status.

It's not the corporation's fault... it's everybody else's fault.

The little dears... 

1 comment:

  1. That tactic is an attempt to deflect the fact that lack of regulation caused so much mayhem in a lot of areas: financially, environmentally... Cantor has emerged as one of the more dangerous voices of GOP.