The vulgar Keynesian does not understand that policy activism itself works against economic prosperity by creating what I call "regime uncertainty," a pervasive uncertainty about the very nature of the impending economic order, especially about how the government will treat private property rights in the future. This kind of uncertainty especially discourages investors from putting money into long-term projects. Robert HiggsAre you waiting for the Budget next week? So am I. So is most everyone I’ve spoken to recently. Nobody knows what to expect: other than it won’t be pleasant. Ireland has been gripped by regime uncertainty since last summer – to use Robert Higgs eloquent concept. The uncertainty continues.
Not everyone is uncertain, of course. Standard & Poors decided not to wait for the Budget, and went ahead and downgraded Ireland's credit rating from AAA ranking to AA+. Perhaps they read yesterday’s OECD report showing that Ireland is unique in embarking upon a tax-increasing, deflationary budget among its member nations (see table - HT Constantin Gurdgiev).
Unfortunately the Budget won’t bring certainty – neither to the Government’s own budgetary situation nor to the outlook for Ireland’s businesses and their employees. The regime uncertainty looks set to continue.