Saturday, June 13, 2009

Making FDR's Mistake - Uncertainty Reduces Investment

Uncertainty Reduces Investment

Next week we start into economic growth and investment. One of the things that decreases investment is uncertainty. In an uncertain economy, investment demand shifts left. In addition, the government can add to that uncertainty. That seems to be what is happening here.

In addition to the economy, hospital officials also cited "the unpredictability of the national health care policy debate."

The Obama administration has announced its intention to enact sweeping health care reform this year.

"The only certainty is that reimbursements for Medicare and Medicaid are going to go down," Askew said.

Mercy Health has also put on hold any future capital expenditures at all of its campuses other than what has already been started.

This is also one of the points that Amity Shlaes makes in The Forgotten Man: A New History of the Great Depression. FDR's constant tinkering with the economy increased uncertainty, reducing private investment and prolonging the depression. We seem to be getting a bit of that today.

HT Instapundit.

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