One graph shows why the GOP claim that “over-regulation” is hurting business confidence is bunk

Republicans are, in a sense, right about two things: (1) There are some counterproductive regulations on the books. (2) U.S. corporate tax rates are quite high compared to many other countries, although the effective tax burden on corporations is low because we have an abundance of special-interest loopholes. (This is the explanation for why many CEOs earn more in salary than their Fortune 100 corporations pay in U.S. taxes, an absurd outcome.)

But the GOP suggestion that over-regulation and over-taxation caused the Great recession — or that changing those things will help the economy significantly — is complete hooey. Business investment (the blue line) is now high. What is disturbingly low is investment in housing (the red line). Government policy directed to fixing the latter problem might actually accomplish something. But that’s not what the GOP is proposing to do.

Here’s the graph via the careful economist, Matt Yglesias, whose explanation is here:

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About Guy N. Texas

Guy N. Texas is the pen name of a lawyer living in Dallas, who is now a liberal. He was once conservative, but this word has so morphed in meaning that he can no longer call himself that in good conscience. Guy has no political aspirations. He speaks only for himself.
This entry was posted in Economic policy, Economics, News, Politics. Bookmark the permalink.

2 Responses to One graph shows why the GOP claim that “over-regulation” is hurting business confidence is bunk

  1. hortonw says:

    Do we really need more investment in housing? I suppose it puts people to work — building and repairing homes is relatively labor intensive. But, houses are already huge compared to historic norms and there are significant energy costs associated with them. Plus, expanding the housing stock may put downward pressure on housing prices, which creates a host of economic problems.

    • Guy N. Texas says:

      Maybe not. But it would be economically useful to do something for the large portion of homeowners who owe more on their mortgage than their house is now worth. I’d bet policy focused there — where the deleveraging inclination is strongest — would produce lots of bang per buck.

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