Lack of certainty hurting the economy

Friday, July 6th, 2012

Editors note: This post was originally published on on July 5, 2012.

Finding something we can all agree on in an election year can be tricky, but let me give it a try. Three years after the official end of the Great Recession, the American economy is not growing like it should.

I spend a lot of time listening to business leaders, economists and people who understand how the economy works. I consistently hear one word popping up in discussions about the prolonged recovery.


In order to play any game you have to know the rules. This is something we learn the first time we play a game of tag on the playground. You start by determining the rules, agreeing to them and then you try to win. You can’t change the rules to your advantage in the middle of the game. If you try, people will stop playing with you.

Of course, within the game there is room for strategy. Situations will change, alliances will change, forces within and beyond your control will change. But the rules of the game don’t change.

Business operates in a similar model. Many of the rules of the game are set by government. Some nations and states choose to have very restrictive rules; some choose to have fewer rules. But once the rules are set the players can decide how they will try to win.

Businesses spend significant time and resources learning the rules, formulating strategies and eliminating variables. They rely on the rules as they formulate a strategy to win.

That’s why it’s maddening to business when the rules are changed in the middle of the game. Businesses like to strategize and think long term. When the people making the rules pass bills, write new regulations, take victory laps and worry about the details later, it’s business that is left to make the best of a bad situation.

Just last week the Supreme Court handed down two rulings that will have a big impact on business. Theoretically, these decisions should have given us a rare and precious moment of certainty. But certainty is an elusive principle, particularly when the federal government is involved.

The first ruling came when the Court essentially ruled states are not welcome to legislate on immigration. Immigration policy is very important to businesses. It impacts the labor force for businesses that utilize high skilled and hourly labor, alike. It can determine where businesses locate and it has an especially big impact on international companies who employ international executives.  The rules of immigration dictate business strategy.

While the Supreme Court’s immigration ruling gives us clarity as to the responsibility of the government (it’s the federal government, for the record), it does not actually solve the issues related to immigration that impact business. In other words, the court acknowledges the problem is a federal problem, but the decision just acknowledges what business has suspected all along—it’s the federal government’s problem, not the states’.

And so we have uncertainty.

The Court’s immigration ruling was quickly overshadowed by the ruling on the Patient Protection and Affordable Care Act, more commonly known as “Obamacare.” This law was riddled with uncertainty from the moment it was drafted. Remember then Speaker of the House Nancy Pelosi (D-California) famously declaring that House members needed to pass the bill to learn what was in it? Talk about uncertainty.

For businesses, the largest payers in the health care system, the rules of the health care system are especially important. For most businesses, health care expenses comprise substantial costs that require long-term planning and strategic thinking.

Businesses hoping for some certainty thanks to the decision by the Supreme Court, are out of luck. By declaring the individual mandate constitutional because it is essentially a tax, the battle to define the individual mandate as a “tax” or “penalty” is underway.

This Supreme Court decision just postponed certainty for another four months until the presidential election, when the people will essentially settle the issue. But don’t get your hopes up just yet, because after that election, there will surely be other factors that will impact the future of health care in America and so in the meantime… you guessed it…


And we have only discussed immigration and health care policy and skipped the most pressing business issue of taxes, which is an absolute mess right now.

This constant uncertainty plagues our nation and hurts our economy. There is simply no way a state can shield itself from the actions of national policy makers over the long haul. But states have shown they can, at least temporarily, thrive by doing what we cannot or will not do at the federal level. Compare the chaos of federal policy making to what you routinely see in Utah, and the benefits of certainty will become crystal clear.

In Utah, Gov. Herbert has set the tone saying it is his job to “keep government out of your wallet and off your back.” It’s a far cry from what we hear coming out of Washington, and it is the bedrock of the policies that have created one of the strongest and most diverse economies in the nation.

State leaders have focused on maintaining a predictably business friendly environment in Utah. The governor and Legislature are rightfully very protective of the state’s Triple A bond rating and Rainy Day Fund. We invest in areas that will strengthen our economy like infrastructure and we have consistent tax and regulatory policies.

Not surprisingly, Utah’s economy is growing at nearly twice the national rate and we have an unemployment rate that is more than two points lower than the nation as a whole.

We’re seeing the results of providing certainty in our state economy. As a nation, we should take notice and create the environment for businesses, and the people who start them and work within them, to thrive.