Is Uncertainty Becoming The World’s Biggest Economic Cost?

[Emjay24]

Do you think uncertainty has become a bigger obstacle to economic growth than taxation or inflation? Which one causes the most long term damage and why?

Yes of course, uncertainty is a bigger threat because Businesses can plan for taxation and inflation since they can adapt to government taxation and some degree of predictable inflation, but definitely they would struggle to plan for uncertainty which might come from unstable government policies, regulations, wars and this can make firms postpone on investments, expansion programs and even hiring of competent workers because the returns becomes very difficult to estimate. With slower investments from uncertainties, there may be slower productivity growth, lack of job creation and this can further damage the economy.

For long-term economic growth, there is need for predictability and stability. Confidence matters more than having lower taxes and lower inflation. A country that experiences high taxes and/or inflation can still have a strong economy because they have more stable institutions, consistent policies and predictable legal systems which would attract long-term investment as well but on the reverse a country with low taxation but unstable policies may never attract long-term investments because investors generally value certainty as it allows them to estimate risks and evaluate expected results more correctly.

A very solid example is the issue with bitcoin, it thrives in a country that has a well structured regulation and policies for it's use but is always dragging to establish a footing in countries with unclear regulations towards it.

[TheUltraElite]

Uncertainty makes risky assets more "tasty" for investors. Nobody wants to invest in Bank FD which has fixed returns and everyone wants to up the risk and take part in riskier assets in a dream to make money.

If you talk about bitcoin, it is certain now that governments will most likely not try to ban it but work around it and attempt to regulate it. Hence holding bitcoin for the long term is always a good option.

For businesses though this might be opposite because uncertainty makes the businessman careful about their allotment of resources or even start the business.

[Royal Cap]

Ofcourse  uncertainty is  the biggest problem. Because even if a businessman knows in advance that taxes are high, he can still plan based on that. But if the rules change repeatedly, it becomes difficult to understand what will happen after the next six months.  Many times people postpone decisions just because of uncertainty even though they have the capital to start a business, so no matter how tough the rules are, if they are not clear and permanent, it is not possible for any country to achieve economic stability.

[danherbias07]

I always believe it is not about uncertainty, but it's about the political will. They are the ones who are making laws, and changes do happen when they try to tinker with those. I get it that they must align it with the world economy, but sometimes corruption happens, and that's when uncertainty comes. Businessmen, investors, and, of course, the people don't even know what they are doing because of the lack of transparency, and so everyone will be surprised by the sudden changes.
This is where more problems come, and the economy gets confusing. Some items are cheaper in the north while more expensive in the south. There's no certainty because everyone will make their own price and will not follow what was set, and we cannot say it is their fault.

[Akbarkoe]

Uncertainty occurs in the economy because it has not found a suitable policy that can be taken in certain situations, such as high inflation and political chaos so that the formation of regulation is stuck in Parliament or government which is still in the discussion stage but still cannot decide because of lack of unity and various forms of conflicting interests so that decision making occurs.

The uncertainty that has a long-term impact is because of the wrong regulation in economic structuring, as happened in my country, even mining cannot be taken by the state because previously the regulators in their era gave full rights to companies to extend or not in their mining areas, this is one form of stupid that has long-term impacts.

[Opiate32]

Its a fair point and uncertainity will restrict business and if true overall in an economy easily can trigger the start of a recession.  Its one of the excuses given for having a 2% inflation target instead of the stability of zero inflation, the idea being its better to have a steady target aided by a constant known decline in currency value.
 
Another perspective would be the outright admiration some have for a command economy, this is common where a military or undemocratic regime can force through policy at every level of the nation forcing consistency.  Some will say no choice is the best choice for a country forcing rapid advancement without delay or inconsistency of free will or economic freedom otherwise.  Genuinely there is some advantage though I will always favor democracy and proper capitalist economy for the best advance possible.

A certain level of inflation may be acceptable if businesses and consumers know what to expect.  Predictability often matter more than trying to achieve perfect economic conditions.

I also agree that consistency shouldn’t come at the cost of economic freedom. A command economy might reduce some uncertainty but it also limit innovation and market competition. In a long run, I would rather see governments provide stable and transparent policies within a free market system than try to control every aspect of the economy.

In my opinion, the real challenge is finding a balance where businesses have enough freedom to grow while also having enough policy stability to plan ahead with confidence.

[Synchronice]

Business can usually adapt to high taxes, inflation or strict regulations if the rules remain consistent. Overtime they adjust there prices, review their budgets or even change the way they operate.
What often hurts investment more is uncertainty. When governments frequently changes policies, when regulations are unpredictable or when business can’t confidently plan for the future, many investors choose to wait instead of taking risks.

Some economists argue that high taxes slows growth while others believe inflation is the bigger problem but I sometimes wonder whether u certainty is even more damaging because it discourages decisions before money is invested in the first place.

Do you think uncertainty has become a bigger obstacle to economic growth than taxation or inflation? Which one causes the most long term damage and why?

It's very hard to say that only one of them among uncertainty, taxation and inflation is bigger obstacle to economic growth because all of them can have terrible effect on their own.
Uncertainty is terrible for every business and it scares both, local and foreigner investors. Uncertainty basically kills the niche because no one wants to create a business in uncertainty. Every government needs a stable condition to attract investors and businessmen or otherwise they'll fail economically.
Taxation carries the same importance. When you have high taxes, you are already unattractive for the business because high taxes mean high prices on the product or the service, which means less profit and the lower chance of selling large quantity of the product or the service.
Inflation carries the same importance too because in a country where inflation is very high, business can't be planned correctly and high inflation can ruin situation for any business at any time. Business needs stability and the reason why I mention business here so many times is that economic is driven by the business.

[Crypto_Timothy]

Do you think uncertainty has become a bigger obstacle to economic growth than taxation or inflation? Which one causes the most long term damage and why?

I think uncertainty is often the most damaging because it amplifies the effects of both inflation and taxation. Businesses can usually adapt to higher costs if they know what to expect but when policies and regulations or like the broader economic environment keep changing unpredictably, it becomes much harder to plan investments or to even hire employees and expand operations. Every potential investor generally value stability as much as favorable conditions because long term decisions depend on confidence that the rules won't suddenly change, nobody wants to invest money into a project and then call it quits some months later, you know.

[r_victory]

I do not consider uncertainty an obstacle to economic growth—after all, no nation is economically stable, not even the wealthiest ones, yet they still grow, sometimes rapidly and sometimes slowly. What I do view as an obstacle is poor decision-making by those responsible for managing financial resources efficiently.

[Opiate32]

I do not consider uncertainty an obstacle to economic growth—after all, no nation is economically stable, not even the wealthiest ones, yet they still grow, sometimes rapidly and sometimes slowly. What I do view as an obstacle is poor decision-making by those responsible for managing financial resources efficiently.

Well I agree that poor decision making can damage the economy but I also think that the quality of the decisions often determine the level of uncertainty business face. For example, when policies change frequently or when governments send mixed signals, businesses struggle to make long term plans. In that sense, poor decision making and uncertainty are closely connected rather completely separate issues.

A business can adapt to different conditions if the rules are consistent. It is the unpredictability of those rules that often cause investors to delay project or move their capitals elsewhere.

[Findingnemo]

High taxes drive the business away from that country, inflation will make the life of every citizen harder, which leads to less spending which means businesses will go out of business and less taxes will be collected so increasing the tax won't do anything either. Government should keep an eye on the interest rate but also about how much money they are printing every year.

Everything should be in balance and the tax rate should be bearable which is the best approach for an econmy to grow or atleast just be consistent.

[Agbamoni]

Do you think uncertainty has become a bigger obstacle to economic growth than taxation or inflation? Which one causes the most long term damage and why?

No I don't think uncertainty is the bigger obstacle economic growth, uncertainty is not even not even a concrete economical obstacle like taxation or inflation, uncertainty is abstract or should I say you can't point it out directly and for me uncertainty is unavoidable, it is always constant infact in life uncertainty is always constant.

I do think uncertainty is a challenge in economic growth. And I'll give my reasons, but before that. Fair to remind you that inflation has proven to be always constant.
Now over to the reason. The first reason is delayed decisions. An aspiring investor may have to wait to see what will happen in the next few months, summing up to a year, before embarking on that financial decision that could change their life. Business owners become more cautious of expanding their business to avoid policies that may make their effort wasted.

[Rubuchi]

Ofcourse  uncertainty is  the biggest problem. Because even if a businessman knows in advance that taxes are high, he can still plan based on that. But if the rules change repeatedly, it becomes difficult to understand what will happen after the next six months.  Many times people postpone decisions just because of uncertainty even though they have the capital to start a business, so no matter how tough the rules are, if they are not clear and permanent, it is not possible for any country to achieve economic stability.

taxes, electricity and other basic amenities and services to be provided by government are the things that bring about uncertainty especially in the business environment. When the economy is unstable, fuel pump prices are on a rise and fall, government policy protecting the ease of doing business is purely implemented, those are the things that increase uncertainty and hardship in doing business in this country. If we can get it right as a government or any government that can get those things rightly, it will significantly reduce the uncertainty in business in the country.

[Faisal2202]

Do you think uncertainty has become a bigger obstacle to economic growth than taxation or inflation? Which one causes the most long term damage and why?

Don't think too much, just start, because inflation is an investment opportunity for you like volatility is. If you have already started a business, let's say you are selling fertilizers, and one bag costs around $10, for example, and you bought it for $6 or $7, let's say.

But after you bought your stock, inflation spiked the rates. Although fertilizer rates update every day and stay the same for the whole day here.

If inflation spikes the prices, you can sell the same bag for $12 with the same cost you spent on one bag, considering you have not sold all the bags in one day. Petrol pumps here start to make excuses because when they sense the rates are going to increase, they start to say they don't have oil now, they are facing shortages. Not just one, but every pump will do the same. It is happening right now due to the closure of the Strait of Hormuz. They are not giving us petrol or are giving only a small quantity.

[Bitcoin.com97]

I do not consider uncertainty an obstacle to economic growth—after all, no nation is economically stable, not even the wealthiest ones, yet they still grow, sometimes rapidly and sometimes slowly. What I do view as an obstacle is poor decision-making by those responsible for managing financial resources efficiently.

Which is right ,and I agreed with you on this, poor decision making influence the economy of a country also, everyone has one or two they are facing in their country,so I won't say uncertainty is the biggest problem economy has,just as you have said no nation is economically stable , yet there is still development and little growth ,most uncertainty is because it hasn't apply a certain level of policy,but it hasn't become the worlds's biggest economic cost .