Regulatory Uncertainty delays Recovery

Robert Wenzel, in this post, echos what we have stated in our previous post How to Eliminate Unemployment in 60 Seconds namely:

3. Respect for Property Rights:  Coercive Government is the major offender here.  By interfering with contracts, changing laws to serve the latest pressure group, and the outright confiscation of private property through taxation and seizure, they have frozen up economic activity.  Because of this interventionism it is practically impossible for entrepreneurs and capitalists (the owners of capital) to make long term commitments and investments in industry since they have no idea what rights of theirs, if any, will still be protected during the investment period.  This is why most banana republics never prosper – capitalists will not invest when their property rights are not respected.

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One response to “Regulatory Uncertainty delays Recovery

  1. “Because of this interventionism it is practically impossible for entrepreneurs and capitalists (the owners of capital) to make long term commitments and investments in industry since they have no idea what rights of theirs, if any, will still be protected during the investment period.”

    This was graphically illustrated last year with the government’s treatment of the bond holders of both Chrysler and GM. It seems to me that the law of contracts (IANAA) regarding the rights of bond holders as secured lenders was over turned. The government no longer respects private property rights.