The Homa Files

In a WSJ editorial today, Vanguard CEO Bill McNabb says that …

Americans who seek to earn a living and save for the future are confused and discouraged.

Concerns of investors are asking: How does this affect my retirement fund? What about my college savings account? How does this affect my taxes? Would I be better off putting my savings under the mattress?

Firms can’t see a clear road to economic recovery ahead, so they’re not going to hire and they’re not going to spend.

It’s what economists call a “deadweight loss“.

He points to economic research that indicates U.S. economic policy uncertainty has been 50% higher in the past two years than it has been since 1985.

Source: PolicyUncertainty.com 

The uncertainty revolves around regulatory policy, monetary policy, foreign policy and, most significantly, uncertainty about U.S. fiscal policy and the national debt.

Vanguard estimates that the rise in policy uncertainty has created a $261 billion cumulative drag on the economy … which adds up to more than one million jobs that we could have had by now, but don’t.

Mr. McNabb makes a strong argument.

But, I respectfully disagree.

I think there’s plenty of certainty … and it’s putting a drag on the economy.

There’s certainty that the national debt will grow as the Feds continue to spend like drunken sailors on wasteful programs and raise taxes to pay for their binge.

There’s certainty that ObamaCare will, at best, stifle hiring and drive up healthcare costs.  At worst, it will be the trainwreck that Dem. Senator Baucus forecast last week.

There’s certainty that the stack of micro-managing regulations coming out of Washington will grow, and grow and grow … literally gridlocking businesses.

You probably get my point.

Businesses understand that President Obama doesn’t like them and will continue to make their lives miserable … and make their investment and hiring decisions easy … “just say no”.

It’s that certainty that’s holding back the economy … not the uncertainty. 

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This entry was posted on April 29, 2013 at 6:59 am and is filed under Economy, Gov't Waste & Inefficiency, Gov't Spending, Government & Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.