Tuesday, July 27, 2010

Brady & Manning: Lessons for Obama

What can President Obama learn from National Football League contract negotiations? Currently, stars Tom Brady and Peyton Manning have not signed new long term contracts with their teams. Why? Well, the teams are reluctant to settle on contracts given the massive uncertainty regarding what rules will prevail under the new collective bargaining agreement. They are reluctant despite the fact that the teams love these two players. The lesson for Obama? The new legislation and massive new regulatory regimes, coupled with questions about new tax hikes possibly coming in 2011, have created huge uncertainty which is making firms reluctant to invest, even in what otherwise might be attractive opportunities. He has to reduce uncertainty and complexity to spur private investment. Less complexity, less ambiguity: that's the key. Thousand page bills are not helpful.