Monday, July 19, 2010

Joe Entrepreneur's Response to Regime Uncertainty

Robert Higgs, one of the great political economists and economic historians of our day, has made popular the term "regime uncertainty" for the business environment created by activist government. When politicians respond to perceived crises with one intervention after another, entrepreneurs find it much harder to perceive opportunities and plan profitable investment projects, because they don't know when and how the state is going to strike next. Higgs used this concept to convincingly explain why the Great Depression lasted as long as it did.

There has also been much discussion recently about how our present Congress and the President are creating regime uncertainty again, which is hampering the adjustment process during our Great Recession. In his weekly column, Lee Wishing, provides evidence for this by relating the business advice of a very successful entrepreneur he knows. Summing up the effects of the bureaucratic administrative state we live in, he writes:

Man is a rational actor who reflects the image of God. Our federal government, however, is frustrating man’s natural desire to make sound economic plans.

In his piece he links to my book and passed along these kind comments:

Thanks Shawn! Your outstanding book “Foundations of Economics: A Christian View” opened my eyes to an incredibly important economic and moral concept: man reflects the image of God as a rational economic planner. It’s even clearer to me, in a profound way, that government meddling runs contrary to the God’s created order. Thanks for removing the scales from my eyes!

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