Regime Uncertainty

Robert Higgs has long argued that the certainty, uncertainty, and psychology affect the economy --in particular, he argues that when the Administration in power attackes business, creates class warfare, and threatens to tax the "rich" or "big business" or to regulate and control business and individual investors, then these people will not invest and the economy will falter. The evidencxe for this is the Great Depression. FDR attacked the private sector, calling business evil and saying that the government is the only solution. President Obama has created the same environment. Those economists arguing for increased spending -- Krugman, Blinder, Feldstein, and othewrs -- are joing the fight. The problem, they say, is too little spending not too much. But think about it. You take money from individuals and churn it through government agenciet and spend it on green industry or ethanol or some other favored government program, how can that increase growth? First, it misallocates resources -- the spending occurs in sectors the free market would not allocate resources to. I find it incomprehensible occurthese economists and many others don't see how illogical their arguments are. It has to occur for one or two reasons. First, these people know they know the answers and no one else does. If only they were in charge. The second reason is that people do not .understand how markets work