Government-Imposed Uncertainty Deepens The Recession


By: Thomas E. Brewton

Repeated Federal interventions in the economy make businessmen fearful of what the government may do next. And that fear prolongs recessions.

In Publicly Berating Bankers and Businessmen Has Consequences, I wrote:

In addition to the problem that New Deal regulations prevented reducing costs enough to produce at a profit, businesses did not expand and rehire, because they were in perpetual uncertainty and fear about what FDR would do next. As a consequence, private investment was at historically low levels during the New Deal era.

A Jackboot at Home, an Olive Branch Abroad listed a few of the heavy-handed, arbitrary interventions by the Obama administration, interventions that create great uncertainty and deter business and bankers from revving up production and lending.

The President’s stimulus plan and his budget cover a wide swath of the economy with unprecedented initiatives, many of them potentially imposing crippling restrictions on business. Executives find it unusually difficult to make plans for future growth, even when they may perceive glimmers of economic revival.

The latest evidence is reported in today’s Wall Street Journal in an article titled Stimulus Confusion Frustrates Business.

Quote:

Uncertainty about the pace of spending from the government’s $787 billion stimulus package, and about new regulations, could contribute to a broader slowdown in business spending and hinder a recovery, some executives and lobbyists say.

Confusion over how to go after money allocated to various stimulus programs appears to be clouding corporate efforts to plan ahead, which were already complicated by the economic slump…

Ivan Seidenberg, chairman and chief executive of telecommunications provider Verizon Communications Inc., said in a recent interview that the Obama administration is moving slowly to dispense stimulus funds because there are too many policy makers in Congress, the White House and various agencies with influence over the process. “They have too many Indian chiefs trying to micromanage how the money is spent,” he said.



Thomas E. Brewton is a staff writer for the New Media Alliance, Inc. The New Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass-roots media outlets.

His weblog is THE VIEW FROM 1776
http://www.thomasbrewton.com/

Email comments to viewfrom1776@thomasbrewton.com

About The Author Thomas E. Brewton:
Thomas E. Brewton is a staff writer for the New Media Alliance, Inc. The New Media Alliance is a non-profit (501c3) national coalition of writers, journalists and grass-roots media outlets.
Website:http://www.thomasbrewton.com/

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