Regime uncertainty why the great depression

Economy in the s. This belief is ill-founded, … Expand. Few topics are as timely as the growth of government. To understand why government has grown, Robert Higgs asserts, one must understand how it has grown. This book offers a coherent, multi-causal … Expand. View 3 excerpts, references background. To the distinguished economic historian Jonathan Hughes, the ambiguous outcomes of attempted deregulation signal America's urgent need to probe the origins of our vast and chaotic maze of government … Expand.

A Monetary History of the United States. View 1 excerpt, references background. In recent years interesting debates have centered on the relationship of the state to modern capitalism.

This article examines the utility of two major theories of the state in interpreting the … Expand. Aggregate economic activity was heavily influenced by the construction sector's expansion, collapse, and failure to revive during the interwar years. The s building boom was the first to respond … Expand. Editors' preface Preface 1.

The debate over controls 2. Forgotten experiments 3. World War I 4. World War II: attacking inflation directly 5. Even when government changes the rules in a way that seemingly strengthens private-property rights overall, the action's specific form may jeopardize particular types of investment, and apprehension about such a threat may paralyze investors in these areas.

Moreover, it may also give pause to investors in other areas, who fear that what the government has done to harm others today, it may do to them tomorrow.

In sum, heightened uncertainty in general — a perceived increase in the potential variance of all sorts of relevant government action — may deter investment even if the mean value of expectations shifts toward more secure private-property rights. Without this uncertainty tax, real U. In addition, the U.

From Mises Wiki, the global repository of classical-liberal thought. Jump to: navigation , search. Main article: Great Depression. Main article: The Great Recession. Referenced Dunkelberg, Holly Wade.

Becker, Steven J. Davis and Kevin M. Baker, Nicholas Bloom, and Steven J. Threats can arise from various sorts of regulation , for instance, of securities markets, labor markets, and product markets. The security of private property rights rests not so much on the letter of the law as on the character of the government that enforces, or threatens, presumptive rights.

During the Great Depression, private investment has fallen significantly. Gross private investment plunged from almost 16 percent of GDP in to less than 2 percent in ; recovered to 13 percent in before falling again in the recession of ; and as late as stood at only 14 percent.

During the war years, private investment ratios ranged from 3 to 6 percent. From through they ranged from 14 to 19 percent and averaged 16 percent — the same as in During the s, private investment remained at depths never plumbed in any other decade for which data exist. Given the unparalleled outpouring of business-threatening laws, regulations, and court decisions, the oft-stated hostility of President Roosevelt and his lieutenants toward investors as a class, the political climate could hardly have failed to discourage some investors from making long-term commitments.

There also exists a great deal of direct evidence that investors felt extraordinarily uncertain about the future of the property-rights regime between and Historians have recorded countless statements by contemporaries to that effect; in the years just before the war most business executives expected substantial weakening of private property rights ranging up to "complete economic dictatorship".

The possibility that the United States might undergo an extreme regime shift seemed to many investors in the late s and early s not only possible but likely.

These questions fall under the rubric of regime uncertainty. Who creates regime uncertainty? It falls on the doorstep of politicians read: Washington, D. Their zigs and zags have enormous effects on free cash flows, the certainty of those cash flows and the interest rates used to discount them to present values. So regime uncertainty will affect the way bankers, who produce credit, size up prospective loans.

Indeed, as regime uncertainty rises, bankers will, other things being equal, tighten their purse strings. According to him, here is how it works:. Roosevelt and Congress, especially during the congressional sessions of and , embraced interventionist policies on a wide front.

With its bewildering, incoherent mass of new expenditures taxes, subsidies, regulations and direct government participation in productive activities, the New Deal created so much confusion, fear, uncertainty and hostility among businessmen and investors that private investment and hence overall private economic activity never recovered enough to restore the high levels of production and employment enjoyed during the s.