by Bill Egnor
The Confidence Fairy and Faith Based Economics
5:44 am in Uncategorized by Bill Egnor
Reality by nualabugeye
All through the last two and a half years there has been talk on all side about confidence. The Republicans started this meme, but it has been adopted by the Democrats as well. Over and over we have been told that Policy X was needed if we are to have a growing and stable economy.
This has been rightly mocked as appeals to the Confidence Fairy. This obsession with confidence grew as an appendix to the voo-doo of Supply Side Economics and has about as much to do with reality as its big brother originally espoused by St. Regan.
It might be palatable if it actually worked, but every time we have been treated to the need to restore confidence it has lead to the opposite result. We have seen that the claims of the Republicans that the ACA would cause less employment because of the “uncertainty” of the new law. Instead after it was passed hiring increased.
We were told over and over again that we had to provide confidence to the markets by engaging in austerity measures in the debt ceiling/deficit reduction battle. Instead of making the world more confident about our economy we got a scolding by (say it softly but say it clearly) the seemingly politically motivated S&P downgrade of our debt.
I am really confused by this push for certitude for business. I didn’t go to business school but I have worked for enough C and D level execs to know that they teach that there is no such thing as certainty in business. In fact that is kind of the point of business in a capitalist system, being able to take a risk that you think is good, but don’t know will pan out, and then either reaping the benefits or suffering the pitfalls.
It is part a parcel of the idea of a market. Yet the self-proclaimed champions of the market are staking the future of our nation on making sure that we remove risk and provide the current masters of the universe with confidence.
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