The Butterfly Defect

“Blame Bush” is the fallback excuse to nearly every Democratic trainwreck these days.

From the Deepwater Horizon oil disaster to Islamic terrorism and the wars against it, that knuckle-dragging Dubya is to blame.

But as Fareed Zakaria notes, Barack Obama is our current President, and it is the policies of this Democrat and his progressive allies that are responsible for causing our current economically depressed state and stifling private sector growth.

 

The key to a sustainable recovery and robust economic growth is to get companies investing in America. So why are they reluctant, despite having mounds of cash? I put this question to a series of business leaders, all of whom were expansive on the topic yet did not want to be quoted by name, for fear of offending people in Washington.

 

Economic uncertainty was the primary cause of their caution. “We've just been through a tsunami and that produces caution,” one told me. But in addition to economics, they kept talking about politics, about the uncertainty surrounding regulations and taxes. Some have even begun to speak out publicly. Jeffrey Immelt, chief executive of General Electric, complained Friday that government was not in sync with entrepreneurs. The Business Roundtable, which had supported the Obama administration, has begun to complain about the myriad laws and regulations being cooked up in Washington.

One CEO told me, “Almost every agency we deal with has announced some expansion of its authority, which naturally makes me concerned about what's in store for us for the future.” Another pointed out that between the health-care bill, financial reform and possibly cap-and-trade, his company had lawyers working day and night to figure out the implications of all these new regulations.

I work for a company that has done well this year despite what some are now calling the ‘Obama Depression.’ Our sales are up and our products in demand, but we're not greatly expanding our workforce. We're hiring essential personnel only and hiring contractors for the rest, because we don't want to go through layoffs if Obamacare cripples our cashflow (our lawyers and HR people are still trying to figure that out, but suspect it will lead to a lower quality of care at higher costs). We're also unsure about the impact other regulations will have on our customer base.

Private sector expansion is critical to pull this nation out of our current depression, but the first duty of the company is like the first duty of any of us; it must survive.

My wife and I watched the post apocalyptic Denzel Washington movie The Book of Eli last night. A surprisingly subversive pro-Christian film, the story exists in a “Mad Max” landscape in the American west, 30 years after nuclear war has ravaged the earth. There is no production or industry that remains, and survivors hoard what few supplies still exist. Eli, a lone wanderer, holds the key to salvation… faith, in the form of the last King James Bible in what was America.

Without giving away the ending, faith is what drives Eli, and it is faith that provides hope for an emergence from these future dark ages.

American companies have hoarded $1.8 trillion into their cash reserves instead of investing to because the Congress continues to insist on passing laws to  “see what’s in them” as Madam Pelosi infamously declared, and the Executive insists on declaring new and expansive powers without writ or justification. Like the battered men and women in the film, today’s companies are in survival mode.

Corporations need faith in the business environment to emerge from this perfectly rational defensive mindset, but they would be utterly foolish to do so with a radical progressive government passing expansive laws they admit they haven’t read and don’t pretend to understand.

There is a butterfly effect that results from every law, and the more expansive the law, the more unpredictable the effect.

Responsible companies, large and small, cannot be expected to drive a nation’s recovery when that nations’ government continues to undermine and rewrite the rules on a constant basis. Elected incompetents are creating a butterfly effect of unintended consequences that drives America ever closer to a financial and social apocalypse.

None seem to have the sense to stop.

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