Akron Beacon Journal...
False uncertainty
Editorial  
October 17, 2011 

What ails the economy? The consensus of economists cites the lack of demand. Consumer spending accounts for roughly two-thirds of economic activity, yet consumers currently are spending at a clip significantly below their rate before the harsh recession. Many are paying off debts and rebuilding their savings. Add the weak housing market, and you have the path to anemic growth and high unemployment. 

Interestingly, many Republicans, running for president and serving in Congress, have been pitching another explanation. They argue that uncertainty afflicts the economy, “job creators” reluctant to act because they aren’t sure what the future will bring regarding regulations and the cost of doing business. Thus, they have been calling for an easing or a halt to new regulations. 

Is such uncertainty, spurred by the Obama White House, harming the economy and job growth? 

No question, regulations increase costs. They also reap benefits, often exceeding the expense, say, in the matter of improving air quality. In looking for an answer, spend time with an analysis by Larry Mishel, an economist at the Economic Policy Institute. The institute qualifies as liberal, no doubt. What is striking is the information Mishel gleans from the surveys of businesses conducted by the more conservative National Federation of Independent Businesses. 

For decades, the organization has been asking small businesses to identify “the single most important problem your business faces.” Mishel notes that the surveys since President Obama took office have found that the problem of “poor sales” (or lack of demand) leads the way. 

Taxes and regulatory burdens rate second and third. The case for uncertainty? Not exactly. As Mishel points out, tracing the surveys since 1973 reveals that taxes and regulations long have been a concern, their ratings of late tracking the long-term trend. If anything, the surveys indicate less concern with regulation under Obama than in the Clinton and Bush the elder years. 

More, the concern about poor sales has soared, the collection of responses reinforcing the consensus of economists about the lack of demand. 

Mishel stresses that the rate of investment and hiring reflects firms with “ample capacity to produce the goods and services they are selling into a shrunken market.” Remember the steep fall, the country still 6.8 million jobs below its pre-recession level. Even with private job growth outpacing the previous recovery (2001) and investment ahead of the prior two recoveries, the economy hasn’t begun to gain sufficient momentum. 

The problem isn’t uncertainty about regulations, or even the prospect of higher taxes. Small businesses highlight the trouble with demand. 

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