Randy Bateman, portfolio manager at Huntington Situs Trust Fund, termed the current economy an “iceberg economy” because of uncertainty, which was a prominent theme in Federal Reserve Chairman Ben Bernanke’s testimony on Capitol Hill on July 20, 2010. From CNBC:
The one thing that’s important [from the testimony] was ‘uncertainty,’” Bateman told CNBC, referring to a line from Bernanke’s testimony.
“One of the drawbacks we’re seeing in the marketplace and in the economy is uncertainty.”
CNBC continued:
Bateman said weak hiring by smaller businesses also point to a degree of market uncertainty.
“They’re seeing a lot of regulatory issues: they’re seeing taxes that may be a little bit hidden before their view and they don’t want to hire knowing that this economy is shaky and so consequently, it’s a self-fulfilling prophecy that this economy is going to stay uncertain and weak,” he said.
When businesses don’t know what to expect with regard to taxes, regulation, and the economy, they hang on to their money instead of investing it in new employees, equipment, facilities, or initiatives. This is a big reason why government needs to tread carefully when considering new regulations, taxes, etc. If businesses don’t know what the near future holds or what impact it might have on their bottom line, they will be much less likely to make the kind of investments that lead to economic growth.
Government needs to walk softly in today’s economy and not stifle any fledgling recovery with heavy taxes and regulation. It is not government that creates jobs and wealth, it is the private sector. Government needs to give the private sector the deference it deserves.
-CH
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