Doom and Gloom?
12:00 AM, Nov 17, 2012 • By IRWIN M. STELZER
Even a mall rush is unlikely to cheer up businessmen, the second important group that will determine the course of the economy in 2013. The drop in share prices has them reaching for headache pills and tranquilizers. Fear of fiscal austerity—higher taxes and a cut in government spending—are already prompting layoffs and freezes on new investment, especially by health care providers and companies making military gear. Hoteliers and airlines are expecting to share the pain. But not just yet: holiday bookings are up, as consumers favor their old flame, Rosy Scenario, over practitioners of the dismal science.
Then there is the queue of regulations. During the first three years of his presidency, Obama issued 953 “major regulations”—costing $100 million or more or otherwise deemed significant by the government—reckons Wayne Crews of the Competitive Enterprise Institute. This compares with thirty by George W. Bush in a similar time period. Crews counts 4,128 additional regulations of all sorts still in the pipeline.
Add the costs that Obamacare will impose on most businesses, the failure of many firms to hit their earnings target, Wal-Mart’s puny third-quarter sales growth (1.5 percent) and downgrading of its fourth-quarter earnings estimate, and it is little wonder that businesses are sitting on some $2 trillion of cash rather than invest it in job-creating projects becomes understandable.
Then there is the third group, the world’s politicians, whose performance makes that of ours seem a model of good governance. The inability of the eurozone leaders to devise sensible solutions to the problems of its over-indebted members, its under-capitalized banks, and the trade imbalance between Germany and the rest of the zone is inevitably producing a recession. China’s governing kleptocracy has yet to decide whether to return to the marketization policies that triggered its great growth leap forward, and its slowdown is rippling through the Asian countries that sell to China’s consumers and provide supplies to its industries. Politicians in charge of the Arab Spring seem more interested in stifling than stimulating the growth of democracy and their tiny private sectors. Gaza’s Palestinians seem more intent on demonstrating their skill with rockets than unleashing the latent entrepreneurial talents Palestinians often demonstrate in other venues.
America’s business leaders behold the works of their and the world’s politicians and despair. With reason.