November 23, 2012

A READER EMAILS:

I have noticed a theme running through a lot of your posts. From tax policy, to health care, to federal criminal laws, it is a constantly changing landscape that is impossible for companies and individuals to navigate. I am working with a company that is looking to start a whole new business program in the healthcare field, but they were holding off until after the election because of all the changes that will of course occur regardless of who won. Now they aren’t even sure if they will proceed with it.

Politicians will talk about helping American manufacturers, small businesses, etc. But instead they constantly change the rules of the game to “help” (of course it only seems to help big contributors who can navigate the rules or get special waivers). Businesses can handle all sorts of challenges, but they need to know that the time, money and effort they put in wont be undermined by a constantly changing rule book. Why would I sacrifice and risk if some politician is going to decide some day that I was too successful and take what I earned, or some competitor will pay enough to get an unfair advantage bestowed upon them by a politician.

At this point, most of the business people I know are truly disgusted with politicians from both parties. They go around making policies, rules and laws as if this is some game. This is my business, my family and my life, and it is constantly under attack by an army of bureaucrats.

Yes, it’s important to have good policies, but it’s also important — perhaps more important — to have stable ones. When things are constantly changing, the problem is called “regime uncertainty.” It can be quite destructive, especially if you want innovation and investment.

The problem is, stable policies offer fewer opportunities for graft and electioneering.

UPDATE: Reader Janet Shagam writes:

The email reminded me of this bit from Federalist No. 62 – “It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is today, can guess what it will be tomorrow.”

Indeed.