Regime Uncertainty: Help Disprove Me
August 29, 2011 2 Comments
I’m starting to see the idea bubble back up in the ‘sphere that regime uncertainty is a serious part of what’s holding the economy back. Since this is something I started freaking out and whining about (as could be easily verified in my archives, but I already link to myself too much as it is) in late ’08-early ’09, I thought I’d revisit it for a brief round of told-you-so.
But maybe I was wrong then and I’m still wrong that regime uncertainty is a significant part of what’s damaging the economy. It seems to me that a naysayer can adopt one of these two positions:
- There’s no regime uncertainty, or it’s not important to the economy. The economy’s bad for other reasons.
- The economy’s not bad, so the regime-uncertainty complaint lacked merit, evidently it didn’t hold back the economy at all.
By the way, I include all things related to ‘Obamacare’ under the category of regime uncertainty.
Anyway, I’d like to know if there’s anyone out there to defend 1 or 2. I think very few people would defend 2 at this time. So my naysayers presumably have to rally around 1. But then they have to supply an alternative explanation for why the economy is so bad. What, pray tell?
I reckon this is why ‘progressives’ and others motivated to downplay the negatives of the Obama administration are so attracted to ‘Keynesian’ explanations of everything. The economy is bad ‘because everyone is hoarding too much cash and there’s not enough Aggregate Demand’ or some such bullshit. (Seriously, I feel like I lose brain cells every time I think or say or type ‘Aggregate Demand’.)
It’s no mystery why ‘progressives’ would prefer this explanation to one involving, among other things, something like Obamacare seriously fucking up the economy. But to give this rebuttal credibility they then have to do the follow-through, which means pretending to actually believe in this ‘Aggregate Demand’ bullshit, and putting forth supposed solutions explicitly aimed at ‘increasing Aggregate Demand’ with as straight a face as they can muster. So the problem was not enough stimulus, and the answer is more stimulus!
It’s like a suspect, having come up with a lame-brained alibi, digging himself in even further by expanding on the web of lies and half-truths to the point where it becomes comical. Or a gambler on a losing streak doubling down. More stimulus, ever more. It’s pathetic.
By the way, looking at my ’08/’09 whining I see another idea I had hit upon was that regime uncertainty explicitly in politics was part of what did the damage. I was talking about the lame-duck Bush Presidency at the time, but it seems to me subsequent events have still fit this pattern. Since ’08 we have had:
- A new President coming in promising to change everything (’08-09)
- A gigantic health care bill nobody read and whose effects nobody can honestly claim to understand being passed by obsessive ideologues who didn’t know what they were voting for (’09-10)
- A new party swept into power in Congress (’10-11)
- That party being unpopular, casting doubt whether they’d hold the House, and the split government raising the spectre of default (’11)
- The President becoming increasingly unpopular, casting doubt whether he’d win re-election (’11)
In other words nobody looking at the political situation has had any respite from the possibility/danger that the governance would change hands soon (and with it, the rules and bureaucracy that affect the business landscape). We have had at least three years running of solid instability and ambiguity in what the shape of our political governing regime is going to look like going forward.
And, three solid years running of recession (or at least, a bad economy).
Did the former cause the latter? Vice versa? Coincidence? I don’t know, but if I’m looking for counterevidence to my theory that political instability harms the economy, I’m not finding any from the past few years.
Am I wrong?