A Discussion of Uncertainty

RUSH: There’s a great piece in the Wall Street Journal today by a guy by the name of Clifford Asness, the managing and founding principal of AQR Capital Management. We all talk about how the reason businesses are sitting on large piles of money, the reason businesses are not hiring is because of all the uncertainty ahead, don’t know what tax rates are going to be, don’t know what Obamacare is actually going to end up being once it’s fully implemented. Mr. Asness has a different theory. The headline of his piece is: “Uncertainty Is Not the Problem — It’s not the policies we don’t know about that are retarding the economy. It’s the bad policies we have.” And he is right on the money.

It’s true that there are people in business, large and small, who are holding back, not expanding, not investing in their businesses because they don’t know what’s coming down the pike. But it’s more, I think, accurate to say there are people sitting on things and not expanding precisely because of what Obama has already done, not so much what’s yet to come, but because of the rotten policies everybody’s saddled with already.

“Many commentators blame our continuing economic woes on ‘uncertainty.’ They allege that recent and anticipated dramatic policy changes make business planning difficult, and that this is retarding growth and employment. This view is not wrong — but our main problem is not the uncertainty surrounding new policies. It is the policies. Consider two uncertain situations. In the first, our business is waiting to find out the location decision for a customer’s new industrial plant, so we know where to build our new supply facility. Until this is resolved, we will not invest in building nor will we hire staff. In the second situation, we know we are in for some pain, someone is going to make our business less productive and profitable, but we do not yet know how much. Planning is marginally more difficult, but the main reason we will not grow in the second situation is that investment is less attractive regardless of the precise resolution of uncertainty.

“In the first case, uncertainty is the obstacle. Once it is resolved, we invest. In the second case, uncertainty is a small part of the problem. The large part is simply that bad things are happening. The day we are told ‘well, it’s exactly a 30% hit to productivity and profits,’ all uncertainty is resolved — yet we will still not invest or hire,” if that’s the climate. So he’s got a great point here. Yeah, there is uncertainty. The people in business have already figured out that it is current policies as well, Obama policies that are stifling and retarding growth. We’ll be back. Don’t go away.

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RUSH: Before I lose any train of thought on this uncertainty business, I want to stay with that for a couple of minutes and then we’ll get to Fred in Homer, Alaska, on the mortgage business. Now, this piece in the Wall Street Journal, Clifford Asness: “Uncertainty Is Not the Problem — It’s not the policies we don’t know about that are retarding the economy. It’s the bad policies we have.” Folks, sounds so simple. These simple truths are the ones that have so much impact. It’s true to say that there is uncertainty because we don’t know how the Obama policies will actuallyassert themselves. We’ve got a pretty good idea, but we also know what’s already in place, and that that stinks, too, and the evidence is the present. We’ve got policies in place. They’ve been in place for two years, two-and-a-half years. They are not inspiring any kind of investment in the private sector. They are not inspiring growth. They are not inspiring the traditional behaviors that have led to economic recovery.

Zilch, zero, nada.

Besides, here is another truism: As long as we have a Democrat president and a Democrat Senate, we don’t have “uncertainty.” We know who they are. We know what liberalism is, we know what it begets, we know who they are. How is there any real uncertainty that more restrictive rules and regulations and higher taxes are coming down the track? It’s a virtual certainty. We don’t have to wonder about it. The people who are saying that they’re holding off because of uncertainty, what they’re hoping is that somebody can stop it. What they’re hoping is that the Republicans will come along and stop this stuff, that there really will be no raising the debt limit, that there really will be no tax increases, that Obamacare really will be repealed.

That’s what the “uncertainty” is translated as being. Because with a Democrat, a liberal Democrat president and a Democrat Senate, we know these players. What they plan, what their policies will cause are dead certainties. So all this talk about uncertainty, really all it means is, “Get rid of it! Come on, Republicans, step up.” It’s not an accident economy started falling off the cliff as soon as it became certain the Democrats are gonna take control of Congress 2007. That’s when the unemployment started. That’s when people started being laid off in great numbers: After Obama won. When Pelosi took over the Congress in 2007 and Obama wins in 2008, you track the numbers and chart it and you will see. People understand. Economic activity fell faster once it became clear that Obama was gonna win, and then after he did win?

Pshew! Hello, plunge.

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