Economist John B. Taylor of the Hoover Institution summed it up aptly: "Unpredictable economic policy -- massive fiscal 'stimulus' and ballooning debt, the Federal Reserve's quantitative easing with multiyear near-zero interest rates, and regulatory uncertainty due to Obamacare and the Dodd-Frank financial reforms -- is the main cause of persistent high unemployment and our feeble recovery."
Historian Robert Higgs of the Independent Institute calls it "regime uncertainty."
We should have learned the lesson during the Great Depression. Today's problems are nowhere close to the 1930s, but there is a similarity in Franklin Roosevelt's policy fog. Higgs writes:
"The insufficiency of private investment from 1935 through 1940 reflected a pervasive uncertainty among investors about the security of their property rights in their capital and its prospective returns. ... The willingness of businesspeople to invest requires a sufficiently healthy state of 'business confidence,' and the Second New Deal ravaged the requisite confidence ... ."
The solution? Taylor finds it in the writing of Nobel laureate F.A. Hayek: the rule of law. "Stripped of all technicalities," Hayek wrote in "The Road to Serfdom," "this means that government in all its actions is bound by rules fixed and announced beforehand -- rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances and to plan one's individual affairs on the basis of this knowledge."
If we are ever to get out of this hole the politicians have dug, we must disabuse them of the conceit that they improve our lives by spending more, guaranteeing investments or "jump-starting" industries.
Only when politicians butt out, leaving us with simple, predictable rules, can the economy grow for us all.