Uncertainty! GASP!

Amid the relative torpor of the US holiday, it might be the moment to wax a little philosophical and ask if you, the listener, have ever noticed that so much of what passes for economic wisdom today involves the persistent overuse of the word ‘uncertainty’?

Take the US Federal Reserve, for example. Mrs. Yellen kept telling us she could not raise rates because ‘uncertainty’ was too great, or at least it was until the moment a man ‘certain’ to lose the election in fact managed to win it.

Ironically, this most uncertain of outcomes has acted magically to confer an unwonted degree of ‘certainty’ upon the forecasts of all those who had completely disregarded Mr. Trump’s chances of ever being able to implement any part of his programme. And that despite the fact that the programme itself still remains largely unarticulated – uncertain, we might say – as is the roster of personnel who will supposedly be charged with enacting it.

The ECB, too, routinely harps on about how Europe’s turgid recovery needs more and more stimulus because ‘uncertainty’ is stopping people from borrowing enough of the cheap money it is throwing at them – at least for purposes other than using it to bid up the price of houses or to speculate in equities and junk bonds.

Even today, its army of panjandrums are out in force, using the occasion of the release of the Bank’s biannual ‘Financial Stability Review’ to bemoan the fact that first Brexit, then Mr. Trump, then Signore Renzi – and perhaps next Marine le Pen, or the Mad Hatter, or the Grinch That Stole Christmas – are once more ‘raising political uncertainty’ to alarming levels. [As an aside, notice that while Mr. Trump seems to have decreased uncertainty at home, he has apparently done so at the cost of heightening the pall abroad, which makes us wonder if it is at best a fundamental quantity of the system like energy, which must be conserved, or, worse, one like entropy which can only ever increase]

In Britain, too, ‘uncertainty’ – what else? – has been blamed by the notionally-independent Office of Budget Responsibility (an oxymoronic title, if ever there was one) for the axe it has taken to its predictions of the country’s growth over the next few years in a Project Fear-style burst of pessimism which naturally excited much wrath among the Brexiteers rightly distrustful of the dirty tricks being played by those eager to overturn the voice of the demos and return Britain to the less than tender clutches of the EUSSR.

Does it never occur to all these worthies that, first and foremost, life itself is intrinsically ‘uncertain’?

In the field of economics, do they not understand that the elevated place which entrepreneurs occupy in our regard is due to the fact that they are the men and women who are both sufficiently nimble and morally robust enough to deal with ‘uncertainty’ when it fires even its most outrageous slings and arrows at them?

More to the point, do they never stop to think that with their constant tinkering, their ad hoc, on-the-hoof policy making; with the ever-changing mix of taxes and tariffs, rules and regulations they impose; with the wild ‘whatever it takes’ swings in credit spreads, interest rates and foreign exchange parities they introduce, it is THEY who are the single greatest source of ‘uncertainty’ and that therefore THEY are the ones holding back those who would otherwise be placing their capital at risk and their shoulders to the wheel and so building us all a more prosperous tomorrow?

Of course they don’t. Turkeys, after all, don’t vote for Christmas – or for Thanksgiving, for that matter.

[This is a lightly edited transcript of a piece first broadcast on WRS radio in Switzerland on November 24th: Go HERE for a podcast]

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