Monday, October 24, 2011

Andrew Stiles is wrong: The problem with the economy is lack of demand.

At NRO, Andrew Stiles tries to prove the "regulatory uncertainty" canard is actually true:
A new Gallup survey asked small-business owners an open-ended question about what they viewed to be “the most important problem” facing the small-business community. It’s not “lack of demand,” as Democrats like to argue. In fact, 22 percent of respondents listed “complying with government regulations” as their top concern.
Here's the graphic that Stiles uses as supporting evidence:

Notice anything about items 2 and 3 on that list? "Consumer confidence" and "lack of consumer" demand" are parsed out as two different items, but the effect is the same: Consumers who aren't confident are consumers who aren't buying stuff—thus, they're not demanding the products that businesses provide. Add those two up, and 27 percent of small-business owners see some variation of the demand side as being the biggest problem with the economy.

Which is, ahem, more than say the same for "regulatory uncertainty."

Stiles is guilty of doing some cherry-picking, too, because later on in the same poll, business owners are asked what they need to see in 2012 in order for their business to thrive. Here's that graphic:

Check it out: The number of business owners who see regulations as the big problem suddenly drops by 10 percent when they have to name the thing that would make their business better.  Sales increases is No. 1. "Job creation" is No. 2—and I don't think it's a stretch to suspect that what business owners here want is for more of their customers to have jobs so they'll start buying stuff again.  Add in "improved economy" in at fourth place, and suddenly you have 37 percent of business owners suggesting that demand is what stands between them and success ... and just 12 percent citing government regulations.

Which makes intuitive sense. Businesses don't like dealing with paperwork and regulations, of course; no one does. But more business owners know that it's not the government that's holding them back right now. It's lack of demand. And we know why there's a lack of demand. Solve that, and we begin to move forward again.

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