WHEN economists talk of political risk, they usually mean war, terrorism or, at the very least, national elections. And 2014 will be a busy year at the polls, with votes in Brazil, India and Indonesia (among the big emerging markets), plus America’s mid-terms. Countries with a combined population of more than 2 billion will be endorsing or rejecting their current governments.

But there is another kind of political risk: the temptation for governments of all political colours to change the rules, whether they relate to tax, the way that companies operate or how markets behave. And that risk has increased significantly since the 2008 crisis.

Given the scale of the banking collapse, extra regulation of the financial industry was only to be expected. New rules requiring banks to hold more capital should make future crises less severe, although the immediate effect may be to restrict lending to firms as banks shrink their balance-sheets. Some other regulatory efforts—the European Union’s financial-transactions tax, for example, or its alternative-investment fund managers directive—look rather less useful.

A broad threat to investors comes from governments with votes to buy and budget deficits to fill. The piles of cash accumulated by companies in recent years are a tempting target. In a sense, firms have only themselves to blame: they have stockpiled earnings, or spent them buying their own shares, rather than using the money to expand capacity and hire workers. But arbitrary decisions by governments may reduce business confidence, and thus inhibit the investment the politicians want to see.

Many governments are trapped between a desire to please voters (whose incomes have been squeezed by austerity and higher commodity prices) and the danger of offending corporate bosses, who have the ability to move their operations elsewhere. This confusion has been amply demonstrated in France, where François Hollande’s government has proposed and withdrawn a series of taxes, including a levy on the sale of internet devices and an increase in duty on diesel fuel. A 75% tax on high incomes still looms, although perhaps the threatened cancellation of football matches at top clubs in protest will change the government’s mind. To voters, kicking a ball is a much more popular activity than running a business. Mr Hollande has admitted that taxes may have risen too fast, and is seeking to change the focus to spending cuts.

In Britain, high energy bills have prompted the opposition Labour Party to propose a price freeze for consumers after the 2015 election. That has led to talk of a revival of 1970s socialism. Yet oil executives are still steaming over the introduction of a windfall tax by the current, Conservative-led, coalition government.

Governments are also struggling to deal with the ability of multinational companies to shift their profits to low-tax countries. In Italy, the centre-left Democratic Party is proposing a “Google tax”, forcing internet firms to use local agencies to handle their advertising business, and thus generate tax revenue.

And then there is the general temptation to add to the weight of regulation. Every year the World Economic Forum publishes a competitiveness survey, based on interviews with executives. One question asks for their assessment of the regulatory burden in their country. Singapore always comes out best. Europe’s performance is dismal: Spain is ranked 125th out of 148 countries in the latest survey, France 130th, Greece 144th and Italy 146th (beating only Brazil and Venezuela). In general, European rankings have been deteriorating, not improving.

Even though EU countries are desperate for growth, there is not much of a drive to cut red tape. Instead, more regulations are still being added: for example, vacuum-cleaners will be limited to a 1,600-watt motor from next September, a figure below the current average.

Excessive regulation in the EU is hardly a surprise, but there has also been a striking deterioration in the perception of America’s regulatory burden. The country has slipped from 23rd to 80th in the global rankings over the past seven years.

What troubles businessfolk and investors most is the random nature of the process. They do not know where the next tax will be levied or regulatory boot descend. When rules are proposed, it can take ages for the details to emerge, making it hard for companies to plan ahead. That is the most insidious—and most underestimated—form of political risk.