WC Varones

Don't lend your hand to raise no flag atop no ship of fools

Cliff Asness on the economy: Uncertainty isn't the problem; Obama is the problem

Asness has a way of being right about almost everything. Today's WSJ editorial is no exception. On how the current lack of business investment and hiring has nothing to do with "uncertainty" and everything to do with known bad policies:
I will tell you the stimulus was wasteful and politicized, and the American people, not being idiots, know they will have to pay for it eventually. People adjust their plans to account for the additional debt heaped on them, meaning lower investment and consumption.

I will also tell you Dodd-Frank, with its enshrining of too big to fail and its large regulatory costs, is an albatross. I will add that ObamaCare's gigantic new entitlement has hurt. I will throw in that massive additional regulatory costs being foisted upon business is an extra drain on the economy. I would definitely say that the disregard for law during the auto-company "bankruptcies" has long-lasting negative effects. I'd even throw in that the president's demonization of business has been harmful. Finally, I'd say the expected tax increases, even if only on the "super rich"—defined as anyone still gainfully employed—weigh upon us.

Then he goes all John Lennon on us:
Now let's go the opposite way and consider good policies surrounded by uncertainty. Imagine we will move from here toward free-market health-care reforms appropriate for a free people. We will reduce government spending and our debt, letting people spend their own money as they see fit. We will lower taxes across the board for individuals and businesses, and we'll reduce and simplify deductions.

Imagine even more that we'll make grown-up decisions and reform entitlements to levels we might possibly afford. Now imagine that while we know the direction of each of these policy changes, alas, we are very uncertain about how far these wonderful ideas will go. Imagine this uncertainty is even higher than it is around today's bad policies. Would these changes, uncertainty and all, make things better or worse?

ObamaCare alone is enough to make companies not want to hire any new employees. It's a huge and expensive new mandate that companies can easily avoid by outsourcing and offshoring. Why would you take on expensive, and increasingly so, health care liabilities that only apply to U.S. workers when you can outsource or build a plant in Asia, Mexico, or Canada? This goes back to my General Theory of Liberalism, that liberals don't understand incentives. If you make it more expensive to hire here, you'll get less hiring here!

The Supreme Court overturning ObamaCare in its entirety would be not only the Constitutionally correct thing to do. It would also be a good first step toward restoring an environment where businesses can invest and hire.


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