In dealing with our current economic crisis, we might remember that a recession is not a once-in-a-lifetime experience. Although economists differ on just what constitutes a recession, there have been some 47 in the United States since 1790. There have been 11 since 1945, and they have averaged 10 months in length. In truth, since World War II, it has not been an overwhelming task to bring the American economy out of recession. The sheer dynamism of our economy, the strength of its entrepreneurial drive—what Keynes called its “animal spirits”—has been enough to revive it very quickly.
Indeed, despite President Obama’s complaints that he had been left “an economic crisis as deep and dire as any since the days of the Great Depression,” he and his advisers did not suggest initially that the future was going to be bleak. Christina Romer, chair of the White House Council of Economic Advisers, famously predicted that the unemployment rate would shortly top out at 8 percent.
Compare that with what Ronald Reagan had to deal with to overcome the Carter “malaise” in 1980: inflation at 11 percent, mortgages at 15 percent, and, by the time he had broken the inflationary cycle, unemployment at 10.8 percent. As Reagan noted in a microphone test which inadvertently went into the press room prior to his weekly radio broadcast on November 20, 1982, “My fellow Americans, I’ve talked to you on a number of occasions about the economic problems and opportunities our nation faces, and I’m prepared to tell you, it’s a hell of a mess.”
Reagan got the country out of the mess because he cut taxes, cut regulation, set clear objectives, and let ordinary Americans make money. Obama is failing to get the country out of a recession because he’s telling Americans what money they can make, what kind of jobs should be created, what extra regulations will be imposed on them (once he and his dysfunctional party have made up their collective minds), and how much more they’re going to be taxed once that has been decided by all the committees that have jurisdiction. In short, he has done the one thing he should have avoided like the plague—he has created uncertainty.
Obama and the belligerent anti-business cartel running Congress have created an increasingly hostile environment for businesses to operate in. It is hard to keep track of all the sectors which have incurred Obama’s wrath or over which he has asserted control. He told the banking industry that he did not run for office to help out “a bunch of fat cat bankers on Wall Street.” He has threatened the health insurance industry, saying that the administration wouldn’t hesitate to block mergers or “to require the settlement concessions necessary to protect consumers.” He extracted concessions from the pharmaceutical industry and then double-crossed them. He used the BP oil spill as an opportunity to close down drilling operations by all companies at depths greater than 500 feet. He has revived all the uncertainties of the coal and utility industries with his promotion of cap and trade legislation.
The sheer perversity—the ideological rigidity of the administration—is well illustrated by its treatment of Milwaukee-based Bucyrus International. Bucyrus stood to win a three-year, $600 million contract to supply mining equipment for a coal-fired power plant in India, subject only to its getting favorable financing rates from the Export-Import Bank. The deal met all the criteria, including the more stringent environmental standards imposed by the Obama White House. The bank denied the financing because the “carbon footprint” of the project was too large. This is not going to stop the construction of the power plant, which is due to open in 2012, as other countries will be happy to supply the machinery. It will just deny jobs to American workers.
But all this is the merest drop in the gusher of complexity and uncertainty which has engulfed business. Read the 54-page report by the Business Roundtable on “Policy Burdens Inhibiting Economic Growth” and you will understand the paralyzing precariousness of industries confronting laws that have not been laid down, regulations in a continuing state of flux, departments and agencies with no clear sense of direction, liabilities that change like the weather, and the certainty that the one force that will not be controlled is tort lawyers.