Saturday, October 16, 2010

It's the Uncertainty, Stupid

Home Depot cofounder Ken Langone had an op-ed in yesterday's Wall Street Journal, really more of an open letter to President Obama taking him to task for his habit of saying that he is pro-business because business growth is what creates jobs, while continually vilfiying, bashing and threatening those very same job creators. He then professes to be mystified about why the economy is still stalled. Mr. Langone makes it simple to understand.
That short-sighted wavering—between condescending encouragement one day and hostile disparagement the next—creates uncertainty that, as any investor could tell you, causes economic paralysis. That's because no one can tell what to expect next.

Anyone with even a passing acquaintance with the business world knows this. Obama doesn't because his cabinet contains the smallest number of people with any business experience of any presidential administration in US history and that includes him.

Langone goes on to say that had he tried to start Home Depot in today's economic and regulatory environment it would never have gotten off the ground, let alone become as successful as it has.

We opened the front door in 1979, also a time of severe economic slowdown. Yet today, Home Depot is staffed by more than 325,000 dedicated, well-trained, and highly motivated people offering outstanding service and knowledge to millions of consumers.

If we tried to start Home Depot today, under the kind of onerous regulatory controls that you have advocated, it's a stone cold certainty that our business would never get off the ground, much less thrive. Rules against providing stock options would have prevented us from incentivizing worthy employees in the start-up phase—never mind the incredibly high cost of regulatory compliance overall and mandatory health insurance. Still worse are the ever-rapacious trial lawyers.

Read the whole thing.
Update: Related: Government Regulation of the Economy Is the ‘Silent Killer’ Good discussion in the comments.

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