On Uncertainty

It amazes me that the question of whether “uncertainty” is a problem in the economy continues to be debated.  Predictably, the left generally denies its influence while the right generally understands it.

Clearly, uncertainty is a problem.  It is not rocket science.

Think of it like this.  You want to buy a house and you know how much you can afford to pay.  You find a house that fits what you are looking for.  But, unfortunately, the laws require you to sign the sales contract before you find out the sale price. Plus the laws allow the seller and his legal team to tack on all sorts of fees after the contract is signed that could add up to a third or more of the sale price that you still don’t know.

Also, the town it is located in is considering imposing a bunch of complicated regulations that you will need to take the time to understand because they will control your indoor and outdoor painting, decorating, gardening, furniture, and appliance choices.  Even if you want to pay someone else to make the decisions and do the work, it will cost you more because complying with the regulations would take time and money.  But you don’t know how much any of this will cost because the town is still figuring out the details of what the regulations will actually be.

That’s uncertainty.  Do you think there might be fewer houses sold and that the ones that do sell will sell for less money?  Why would uncertainty in the costs of hiring employees and the regulations for running a business not have the same impact?

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