Government and Economic Uncertainty
Comment in http://talk-politics.livejournal.com/1458907.html?thread=117115867#t117115867
You make a valid point about people not wanting to start new ventures or make big purchases or investments in times of uncertainty. Everyone knows this intuitively. Just look how quickly individuals reduced their borrowing and started saving more, starting in 2008.
This suggests that the government should NOT be 'trying to boost' the economy. Every new regulation, tax, or law that affects the economy creates a changing environment and brings unintended consequences.
It's like trying to play a football game, and the referees keep changing the rules between each play. The government should NOT be playing favorites and changing the rules, but should enforce uniform rules on every player through the entire game.
While creating more regulations and incentives is seen as 'doing SOMETHING' by lawmakers, the media, and the public -- their effect is to slow the economy. The best thing for government to do is to do NOTHING, or else to repeal past incentives and laws.
You make a valid point about people not wanting to start new ventures or make big purchases or investments in times of uncertainty. Everyone knows this intuitively. Just look how quickly individuals reduced their borrowing and started saving more, starting in 2008.
This suggests that the government should NOT be 'trying to boost' the economy. Every new regulation, tax, or law that affects the economy creates a changing environment and brings unintended consequences.
It's like trying to play a football game, and the referees keep changing the rules between each play. The government should NOT be playing favorites and changing the rules, but should enforce uniform rules on every player through the entire game.
While creating more regulations and incentives is seen as 'doing SOMETHING' by lawmakers, the media, and the public -- their effect is to slow the economy. The best thing for government to do is to do NOTHING, or else to repeal past incentives and laws.