If President Obama's Anti-Business Attitude Is Hurting Investment, Can Someone Explain How

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Friday, 09 July 2010 04:18

In his column this morning, Paul Krugman takes issue with the claim that the Obama administration's anti-business attitude is responsible for the economy's weak investment. Krugman makes the obvious point that, given the sharp falloff in output, investment is not especially weak.

However, it would be fair to turn the tables on the people making this argument, where is the evidence that Obama's regulations have hurt investment? Some firms are affected by new regulations more than others, if his regulations are hurting investment then we should see the weakest performance in the firms that are most affected.

For example, the health care bill (the most-often cited "job-killer") imposes new requirements on business. This is true and it gives us what in principle would be a testable hypothesis. Are the
businesses that are going to be subject to new requirements (mid size firms) performing worse relative to firms that already overwhelming met these requirements (large firms that overwhelming provided
coverage) or firms that are not going to be subject to requirements (fewer than 50 workers). None of the "Obama is killing investment crowd" have even tried to sketch this one out. A similar analysis could be constructed with regards to most other regulations.

It would be interesting to see if the evidence actually supported the anti-business hypothesis in the case of health care or any other regulation. My guess is that it doesn't, but until someone produces such evidence, the anti-business explanation for weak investment is basically just name calling.