Legal Commentary

Recovery or ?Reform??

By Jonathan H. Adler

University of Chicago economists Gary S. Becker, Steven J. Davis, and Kevin M. Murphy argue that continuing legal and regulatory uncertainty have inhibited efforts to get the economy back on track.  Among other things, uncertainty about the rules of the game discourages investment and economic risk-taking.  After surveying some evidence to support their argument, they conclude:

These facts suggest that it was a serious economic mistake to press for a hasty, major transformation of the U.S. economy on the heels of the worst financial crisis in decades. A more effective approach would have been to concentrate first on fighting the recession and laying solid foundations for growth. They should have put plans to re-engineer the economy on the backburner, and kept them there until the economy emerged fully from the recession and returned to robust growth. By failing to adopt a measured approach to economic policy, Congress and the president may be slowing the economic recovery, and thereby prolonging the distress from the recession.

Full post as published by The Volokh Conspiracy on January 04, 2010 (boomark / email).