George Will explains why confidence is so important and how uncertainty about government intervention can lead to disarray in the private sector:
Today’s evidence suggesting sluggish job creation might give pause to a less confident person than Obama. But pauses are not in his repertoire of governance. Instead, yielding to what must be a metabolic urge toward statism, he says the Gulf of Mexico oil spill is yet another reason for yet another explosion of government’s control of economic life. The spill supposedly makes it urgent to adopt a large tax increase in the form of cap-and-trade energy legislation, which also is climate legislation, the primary purpose of which is, or once was, to combat global warming, such as it is.
At any time, some economic conditions would be better than others, but the more certainty about conditions the better. Today investors and employers are certain that uncertainties are multiplying.
They are uncertain about when interest rates will rise, and by how much. They do not know how badly the economy will be burdened by the expiration, approximately 200 days from now, of the Bush tax cuts for high earners — a.k.a. investors and employers. They know the costs of Obamacare will be higher than was advertised, but not how much higher. They do not know the potential costs of cap-and-trade and other energy policies. They do not know whether “card check” — abolition of the right of secret-ballot elections in unionization decisions — will pass, or how much the economy will be injured by making unions more muscular. They do not know how the functioning of the financial sector will be altered and impeded by the many new regulatory rules and agencies created by the financial reform legislation. The economy has become dependent on government stimulation of demand, and no one knows what will happen as the stimulus spending wanes.
Uncertainty is a consequence of hyperkinetic government, which is a consequence of the governmental confidence that is a consequence of progressivism. The premise of progressivism is that all will be well if enough power is concentrated in Washington, and enough Washington power is concentrated in the executive branch, and enough really clever experts are concentrated in the executive branch. This is why the government’s perceived impotence concerning the gulf oil spill is subversive of the Obama administration’s master narrative.
Source: Washington Post
As long as our governments continue to engage in games of numbers tampering, double speak and flat out lies, the private sector will remain on edge.
Business owners, especially small businesses who are responsible for 90% of the employment in the US, don’t know what to expect. Thus, they cannot take risks like expanding product lines or production, hiring more employees, or taking on loans.
Unlike Federal and State governments, businesses do not have the ability to print endless amounts of money with no intention of ever paying that money back in real terms. Borrowing by small business is backed by, usually, the owner’s personal assets. And very few are willing to stake their life’s work on a promise or a hope that change is coming.