Wednesday, August 22, 2012

Barrack Obama And The Pain Of Regulatory Uncertainty

It is probably safe to say that most business leaders in the US are members of the 'Second Sigma'.
These are the folks that typically control business expansion, hiring, and the like.

One of the particular quirks of the Second Sigma is that they absolutely LOATHE the possibility of looking like fools or rubes.  Much of their identity and ego is tied up in being 'smart'.  Thus uncertainty is extremely painful to them and tends to put them into paralysis by analysis.

For instance, come the next couple of years, it might cost 10% more to employ a person, maybe 25%, and maybe even about the same.  But terrific regulatory uncertainty exists because of Obamacare and other legislation which will be interpreted by administrative types in DC.  When I say interpreted, I mean largely dictated.  What are they going to decide to do?

This interferes mightily with the ability to determine whether an expansion or wave of hiring is going to be profitable.  Will we be scourged by whips or scorpions?  Under such circumstances most of the Second Sigma simply hunker down.  Judging by the employment population ratio, garbage index, and other stats that are difficult to manipulate, that is precisely what they are doing.

My prediction is that if it looks like Romney is going to win during October, that the economy will start to pick up a bit.  Perversely, such a pickup might cause him to not win, but nobody ever accused the median voter of making sense.

No comments: