# What is this "uncertainty" and why is it so bad? **URL:** \ **Category:** Great Debates\ **Created:** [August 16, 2011, 10:52pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966 "2011-08-16T22:52:12Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 17, 2011, 5:06pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/21 "2011-08-17T17:06:53Z")
Can someone point to a period of history where there was more certainty? Seems to me that certainty leads to poor decisions, like “Of COURSE real estate is going to keep going up! Mortgages are cheap and one can make MILLIONS by flipping house after house after house, and there’s NO WAY someone can lose money that way!” It seems to me that “uncertainty” is, indeed, little more than a political attack. ---
**Author:** ![raspberry\_hunter](https://avatars.discourse-cdn.com/v4/letter/r/b19c9b/32.png) [@raspberry\_hunter](https://boards.straightdope.com/u/raspberry_hunter)\ **Post date:** [August 17, 2011, 5:08pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/22 "2011-08-17T17:08:07Z")
> [@Leaffan](#): > > And how does one grow a business without investors? I still stand by my claim that it’s market uncertainty that they’re talking about. One sells one’s product, makes profit, uses that to attract more customers (either by sales or by improving the product). The company I work for is privately owned, and I suppose you could say that the private owners are “investors,” but since the company was started they haven’t put any additional money into it. It’s the money generated by the company itself that grows the business. My company is not hiring full-time employees right now even though through the summer we have an insane load of work, because after the summer we… might have very little work. (We are hiring interns and consultants that we can then take off of our payroll, though.) We’d been hiring full-time workers pretty regularly since before I started five years ago up until last year. > [@Dangerosa](#): > > Oh, and I don’t think people are worried about health care costs. The uncertainty I’m hearing concerns about are a double dip recession, a reduction in available money. If my health care costs go up for my widget business, they’ll go up for my competitors widget business - and both our costs of goods will go up. Yeah, and then no one will buy your widgets (unless you produce basic food or shelter, I guess) because the price is so high and they figure they’ll do without. And then both of you go out of business. My company doesn’t sell widgets exactly, but management is VERY worried about health care costs, which have increased a lot more in the last two years than in preceding years, because if they are paying out a higher overhead in health care, they can provide less product for the money our customers are paying, and our customers might just decide it’s not worth it and stop buying from us at all. Or from anyone else. ---
**Author:** ![Leaffan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/leaffan/32/299_2.png) [@Leaffan](https://boards.straightdope.com/u/Leaffan)\ **Post date:** [August 17, 2011, 5:09pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/23 "2011-08-17T17:09:22Z")
Certainty only lasts briefly, before uncertainty kicks back in. Followed once again by certainty. We’re a couple of years from certainty at this point. Until, well… ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [August 17, 2011, 5:11pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/24 "2011-08-17T17:11:02Z")
> [@jamiemcgarry](#): > > But isn’t this exactly the idea of _risk?_ Naw, risk is calculable. Uncertainty is not as you don’t know what your inputs are. ---
**Author:** ![raspberry\_hunter](https://avatars.discourse-cdn.com/v4/letter/r/b19c9b/32.png) [@raspberry\_hunter](https://boards.straightdope.com/u/raspberry_hunter)\ **Post date:** [August 17, 2011, 5:11pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/25 "2011-08-17T17:11:28Z")
> [@Ravenman](#): > > Can someone point to a period of history where there was more certainty? This is not really quite an answer to your question, but someone in upper level management at my company once said to me, during the 2008 primaries, that if either McCain or Hillary won, he would not be concerned because he knew what to expect from them. If Obama won, he said that would be far more uncertain because he didn’t know what Obama would do. It’s not an answer to your question because obviously by now I think people have an idea what to expect from Obama himself. Though I’m not sure people know what to expect from e.g., the health care law. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [August 17, 2011, 5:31pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/26 "2011-08-17T17:31:28Z")
> [@Ravenman](#): > > Can someone point to a period of history where there was more certainty? > > Seems to me that certainty leads to poor decisions, like “Of COURSE real estate is going to keep going up! Mortgages are cheap and one can make MILLIONS by flipping house after house after house, and there’s NO WAY someone can lose money that way!” > > It seems to me that “uncertainty” is, indeed, little more than a political attack. Thats not certainty, that was bad risk analysis. Anyone who had bothered to do a root cause would have come up with the following… Cheap interest only mortgages with balloon payments + stagnant middle class salary growth -\> defaults in five years -\> oversupply of houses on the market -\> housing prices fall -\> consumers underwater (because they have those no principle loans) -\> more defaults -\> housing prices fall = banks lose money since what the loan was secured with is worth less than the loan. But you do have a point “certainty” can lead to overconfidence. But there are times when the crystal ball is more foggy than others. Right now, its pretty foggy. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 17, 2011, 5:35pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/27 "2011-08-17T17:35:38Z")
> [@Ravenman](#): > > Can someone point to a period of history where there was more certainty? Sure - WWII, for a fairly extreme example. Business knew for damn sure there was going to be demand for their products. [QUOTE=Diogenes the Cynic] It means Obama is black. Plain and simple. [/QUOTE] What a stupid thing to say. Regards, Shodan ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 17, 2011, 5:39pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/28 "2011-08-17T17:39:19Z")
> [@Shodan](#): > > Sure - WWII, for a fairly extreme example. Business knew for damn sure there was going to be demand for their products. Are you referring to war materiel or for consumer goods? Because if you’re suggesting war materiel, then it seems to me that the case for upping government spending right now would help provide certainty, right? ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [August 17, 2011, 5:42pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/29 "2011-08-17T17:42:30Z")
Another not so “extreme” example that doesn’t involve massive government spending is the certainty that American businesses had in the 1950s-70s that they were the best in the world and that they could never be toppled as the leaders in their respective industries. Or the English certainty in the late 19th century that their industrial leadership would remain unchallenged. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [August 17, 2011, 5:58pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/30 "2011-08-17T17:58:45Z")
> [@Diogenes\_the\_Cynic](#): > > It means Obama is black. Plain and simple. No, this isn’t a racial issue. Businessmen don’t care about race. They’d be happy to work with a black President if he was pro-business “Pro-business” is a loaded term. Somebody on the right will say that the problem is that the Obama administration (and Democrats in general) is hostile to business - that all businesses want is to be left alone and not have the government harming them. Somebody on the left will say that’s bullshit - what businesses really want is a Republican administration that will show them favoritism and protect them from any mistakes or bad decisions they make. ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [August 17, 2011, 6:24pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/31 "2011-08-17T18:24:14Z")
> [@Diogenes\_the\_Cynic](#): > > It means Obama is black. Plain and simple. …and steered straight into the ditch. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 17, 2011, 6:25pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/32 "2011-08-17T18:25:14Z")
> [@Ravenman](#): > > Are you referring to war materiel or for consumer goods? Because if you’re suggesting war materiel, then it seems to me that the case for upping government spending right now would help provide certainty, right? No. We already did that with the stimulus and it failed. If you are a business owner looking to expand, it doesn’t help to have a one year government spending spree. You aren’t going to build more factories, warehouses, hire new managers and employees to serve the government contract for one year. I guess if the government had a trillion dollar stimulus EVERY year, guaranteed to never stop, then that would help business, but in order to fund that we would need massive tax increases, so back to square one (or even less than that). ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [August 17, 2011, 6:44pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/33 "2011-08-17T18:44:51Z")
> [@Ravenman](#): > > Are you referring to war materiel or for consumer goods? Because if you’re suggesting war materiel, then it seems to me that the case for upping government spending right now would help provide certainty, right? No, of course not. You can’t cut off war spending on a dime like you can stimulus spending. Like \*\*jtgain \*\*says. Regards, Shodan ---
**Author:** ![elfkin477](https://avatars.discourse-cdn.com/v4/letter/e/a9a28c/32.png) [@elfkin477](https://boards.straightdope.com/u/elfkin477)\ **Post date:** [August 17, 2011, 6:46pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/34 "2011-08-17T18:46:23Z")
> [@Cheesesteak](#): > > What, they weren’t going up before Obama got into office? Only for businesses that actually offer health insurance, which half of American jobs don’t. With Obama’s new health plan they’ll be fined for failing to provide any so half of companies will now have definite cost increases, and the half that do provide insurance voluntarily don’t know how much their costs will rise, either. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 17, 2011, 6:53pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/35 "2011-08-17T18:53:54Z")
> [@jtgain](#): > > No. We already did that with the stimulus and it failed. If you are a business owner looking to expand, it doesn’t help to have a one year government spending spree. You aren’t going to build more factories, warehouses, hire new managers and employees to serve the government contract for one year. > > I guess if the government had a trillion dollar stimulus EVERY year, guaranteed to never stop, then that would help business, but in order to fund that we would need massive tax increases, so back to square one (or even less than that). But tax rates were much higher in the 1940s, but that didn’t cause uncertainty? And huge piles of debt didn’t cause uncertainty either? But now, when Fox News makes up nonsense about new regulations being just around the corner like some socialistic boogeyman, that scares the living daylights out of businessmen? What nonsense. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [August 17, 2011, 7:33pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/36 "2011-08-17T19:33:29Z")
> [@Ravenman](#): > > But tax rates were much higher in the 1940s, but that didn’t cause uncertainty? Why would they? They’re high, and you know with certainty that they’re high. Where’s the uncertainty? ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 17, 2011, 8:36pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/37 "2011-08-17T20:36:34Z")
> [@Machine\_Elf](#): > > Why would they? They’re high, and you know with certainty that they’re high. Where’s the uncertainty? Because we’re told that high tax rates coincide with people deciding to stop working because it isn’t worth it. If that’s the case, then one would think that companies would have thought about whether it is worth continuing being in business if they had to pay so much in taxes. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [August 17, 2011, 8:41pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/38 "2011-08-17T20:41:13Z")
> [@Ravenman](#): > > Because we’re told that high tax rates coincide with people deciding to stop working because it isn’t worth it. If that’s the case, then one would think that companies would have thought about whether it is worth continuing being in business if they had to pay so much in taxes. That’s not uncertainty. If a business is not sustainable at high tax rates, then that’s just a case of a business not being viable in that tax climate. If tax rates are currently low, AND if growth is viable at those low tax rates, AND if growth is not viable at elevated tax rates, AND it’s not clear whther tax rates will become elevated in the near future, then that’s a case of uncertainty inhibiting business growth. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 17, 2011, 8:43pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/39 "2011-08-17T20:43:18Z")
I’m aching to respond, but I’m not going to press my case in this forum. Perhaps I’ll join the ongoing tax thread in GD to continue the discussion. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [August 17, 2011, 8:58pm UTC](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966/40 "2011-08-17T20:58:17Z")
> [@Ravenman](#): > > I’m aching to respond, but I’m not going to press my case in this forum. Perhaps I’ll join the ongoing tax thread in GD to continue the discussion. But this discussion here doesn’t concern the appropriate level of taxes one bit. If tax rates are 60% and will remain there, then there is no uncertainty. That speaks nothing of whether that is the correct tax rate or not. If tax rates are 4%, but they MAY go up to 6% next year, but you really don’t know, then that creates uncertainty. This is almost a GQ answer because everyone agrees that taxes create market inefficiencies, however, everyone recognizes that some level of taxation is necessary to have a functioning government. We just disagree on that level. But for the purposes of uncertainty, it is again almost GQ to say that a business not knowing whether the Bush tax cuts will expire in two years or be renewed, contributes to this uncertainty. The debate on letting them expire v. keeping them is not relevant to this thread, however kicking the can down the road for two more years prolongs uncertainty. Either raise the taxes and build in more market inefficiencies now, or agree that these rates are permanent. One or the other eliminates uncertainty with regard to taxes. [Previous page](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966.md?page=1) [Next page](https://boards.straightdope.com/t/what-is-this-uncertainty-and-why-is-it-so-bad/592966.md?page=3)