The Economic Uncertainty Principle
June 8, 2012 Leave a comment
Sometimes you can see an argument hits close to home from the way someone argues back, and it’s in that spirit that it’s fun to read people like Kevin Drum trying to insist that Obama IS NOT harming the economy by making things economically uncertain so there. How does he construct this argument? By appealing to the tried and true, well-known Perfect Separability Of Economic Stuff From All Other Stuff Theorem:
There are two kinds of uncertainty here: regulatory uncertainty and economic uncertainty. Conservatives complain about the former regularly, but there’s simply no evidence that regulatory uncertainty is, or ever has been, a significant issue for American businesses. In fact, all the evidence says exactly the opposite.
Economic uncertainty is a whole different thing, and there’s really nothing here to come around on. That’s been holding back investment and hiring for a long time…
Of course, regulations have no effect whatsoever on economics (as a Corollary to the Theorem). So it can’t possibly be the case that regulatory uncertainty has, like, an actual effect on economic uncertainty or anything. Nope. ‘Whole different thing’.
Note, it turns out that once you separate ‘uncertainty’ into ‘regulatory’ and ‘economic’, and then dismiss the ‘regulatory’ uncertainty as not worth addressing, you discover that the way to fix the ‘economic’ uncertainty is…drumroll…’further fiscal and monetary stimulus’. Kevin Drum everybody! Obligatory: He’s a very nice guy.