Regime Uncertainty Kills U.S. Growth

Steve H. Hanke's picture

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

On April 6th, the Wall Street Journal published an editorial that merits careful examination: “Jack Lew’s Political Economy”. The Journal correctly points out that the Obama administration’s meddling with regulations and red tape is killing U.S. investment and jobs. The most recent example being the Treasury’s new rules on so-called tax inversions, which burried a merger between Pfizer, Inc. and Allergan PLC.

As the Journal concluded: “This politicization has spread across most of the economy during the Obama years, as regulators rewrite longstanding interpretations of longstanding laws in order to achieve the policy goals they can’t or won’t negotiate with Congress. Telecoms, consumer finance, for-profit education, carbon energy, auto lending, auto-fuel economy, truck emissions, home mortgages, health care and so much more.”

“Capital investment in this recovery has been disappointingly low, and one major reason is political intrusion into every corner of business decision-making. To adapt Mr. Read [Pfizer CEO Ian Read], the only rule is that the rules are whatever the Obama Administration wants them to be. The results have been slow growth, small wage gains, and a growing sense that there is no legal restraint on the political class.”

Washington’s destructive policies have been dubbed “regime uncertainty” in a strand of innovative analyses pioneered by Robert Higgs of the Independent Institute. Regime uncertainty relates to the likelihood that an investor’s private property – namely, the flows of income and services it yields – will be attenuated by government action. As regime uncertainty is elevated, private investment is notched down from where it would have been. This can result in a business-cycle bust and even economic stagnation. I recommend Higgs’ most recent book for evidence on the negative effects of regime uncertainty: Robert Higgs. Taking a Stand: Reflections on Life Liberty, and the Economy. Oakland, CA: The Independent Institute, 2015.

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Grandad Grumps's picture

Lol.. I would say regime certainty has driven the US into the ground, not uncetainty. We have had the same republicrat regime (controlled by the same power behind the scenes) in power since at least Kennedy.

Our destiny is a box canyon.

TheWrench's picture

I find Wall Street's Lack Jew so insightful.

gmak's picture

Regime uncertainty? Try too much debt, not enough savings. Malinvestment as far as the eye can see, and a .gov that immorally takes our money and wastes what they don't give to their friends. Try an "Ayn Randian"-type environment where I have to give what I've sacrificed much to get to someone who has sat on their ass and complains that they don't have what I have, and somehow this entitles them to free stuff.

Big Corked Boots's picture

"which burried a merger"

I'm not going to read something by an alleged expert who can't even run spell check.

the grateful unemployed's picture

wait until Trump simplies it

Grimaldus's picture

Well duh, this is what happens when you allow some progressive America hater (Obirdbrain) to usurp the White House who started his political career in the living room of a domestic terrorist--a domestic terrorist (Bill Ayers) who still wants 25 million innocent Americans dead to jumpstart his progressive America hater "utopia".

Now all the morons are sayin "Who coulda knowed?--- OMFG we are witnessing the progressive stupid in all it's glory.

It was sooooooooooooo easy to see before Obirdbrain was elected which way he was gonna go---- which was straight to progressive criminal tyranny.

Obirdbrain and his progressive America hater pals really HATE America and Americans. I mean hard scrabble hatred off the scale. So much so Obirdbrain is murdering American citizens with an illegal alien criminal army, welcoming murdering criminals in with open arms any way he can get them. In addition to allowing an invasion across the boarder Obirdbrain is now  directly importing sunni islamic murderers at a frantic pace.....he has a ways to go before he can satisfy his master Bill Ayers wish for millions of American citizen deaths.

If you want crime, you must first have progressives. Criminal at their core.




Solio's picture

Nobody can afford the wall street germ hole.

starman's picture

55% of Americans work for the Gov! 

Where is the profit our growth in there? 

Should we call that overhead? ! 

Sanctuary2's picture

is paper-shuffling counted in the GDP?

TheABaum's picture

Worry more about the people that don't work for the government but still collect a check.

SubjectivObject's picture

My, what a wonderful misdirection you have there.

TheABaum's picture

Its not misdirection,dumbass. There's fifty million on food stamps. We don't have 50 million government workers.

Raging Debate's picture

So big business is now turning on the politicos. This was inevitable. Since the little guy has nothing more to tax, .gov begins taxing the big corps more. In the end you play with the Fascist devil you get burned. And the spoiled sociopaths at the top arent going to be wise and keep there mouth shut. Making $20 M a year just isnt enough lol. 

RMolineaux's picture

It would appear that Doctor Hanke is forgetting the disasters of 2008-9 when the absence of regulation, or the lack of enforcement of existing regulation caused the great financial breakdown of those years. Have you ever watched teenagers play baseball without an umpire? Thats what happens when unregulated capitalism attempts to regulate itself.

brightdayfin's picture

RM: capitalism is absent.  what we have is corporatism.

Wolfbay's picture

True, The Clintons serve Wall Street and when the big banks wanted to scrap Glass Steegle the Clintons were glad to oblige.

overmedicatedundersexed's picture

rmolineaux, self deluded but very positive of your opinion.

"Thats what happens when unregulated capitalism attempts to regulate itself."

you cannot, like most economists, see crime and it's sister corruption.

2008 was just crime, simple theft on massive scale. no .gov regulation by sec, doj ..eric holder continued the crimes and non enforcement of already exsisting laws.

adding more socialist/communist policy will not correct the justice systems failures. your model for .gov just makes the criminals more powerful and more blood thirsty. and we end up with the killing fields of pol pot.

Oldwood's picture

It is NOT a lack of regulation, but a lack of enforcement and accountability. We have more laws and regs on the books than is humanly possible to comprehend. All they do is provide employment for lawyers and cover for criminals. Everyone knows what fraud and theft look like, but we have lawyers and politicians to explain to us WHY everything we see as criminal and corrupt is not, and further is necessary for the continuance of our "prosperity".

TheABaum's picture

A lack of regulation?


Have you not ever seen the ponderous tome that is the Code of Federal Regulations, or are you just an ideologue?

Uchtdorf's picture

Did you forget your sarc tag?

The US hasn't enjoyed "unregulated capitalism" for at least 100 years. 

YouThePeople's picture

How academic of can't grow something that's dead.

You and the other 'scholars' can chew on that.

SubjectivObject's picture

I'll take Crystals for 1000, Alex.

Herdee's picture

I say get rid of all income tax.Go back to a strict gold standard and only have one national VAT ( value added tax ). You only pay tax on what you consume,nothing more.

Oldwood's picture


Sales tax YES, but no to Vat as Vat is concealed through incorporation into the cost of goods and thereby BECOMES part of the cost of the product or service. If we could EVER reform taxes, the first and foremost consideration should be transparency, and sales tax is there for each and every consumer to see with each expenditure. VAT is part of the same corrupt scheme of simply taxing business so as to conceal the true taxes consumers must pay. We have some of the highest business taxes in the world that WE are paying yet we constantly point fingers at business who is trying to escape the tax and regulatory burdens so as to be able to compete, given American citizens do not see fit in paying these taxes via higher costs from any patriotic duty.

What we require is transparency and accountability, and nothing that provides cover for the thieving fuckers is EVER going bring us THAT.

farmerbraun's picture

In NZ the VAT  (GST) is itemised and shown separately on every invoice.

If the invoice amount  includes the VAT, then that fact must be stated on the invoice.

No problem with transparency there.


if the imposition of VAT or sales tax (on everything) leads to the abolishment of  all income tax then that is a good thing, right?  An incentive to work industriously , and to be taxed only on non-business expenditure ie personal consumption. Don't spend , and pay no tax.





Big Stapler's picture
Big Stapler (not verified) Herdee Apr 9, 2016 3:55 PM

@Herdee -- I suppose you are trying to suggest ways that used to work, but come on... do you seriously believe the criminals in Washington will create a VAT in place of an income tax?

Or will they impose VAT plus income plus sales tax plus gas tax plus luggage check-in fee... oh crap, we have to have fees in all those categories too.

Glass-Stegal was 36 pages long. The Dodd-Frank joke was more than 1000 pages, and contained no actual regulations (14,000 more pages were written by unelected bureaucrats in unregulated government agencies, who take bribes from lobbyists).

Its time to charge government employee unions with RICO violations. Take trebble damages from their pensions (which we the people lost decades ago). There have been thousands of bribes taken from lobbyists, way more than the three we need for a conviction.

jeff montanye's picture

you are entitled to your opinion but it would be yet one more tax (and there are many) that favors the rich (because they consume far less of their income than do those poorer).

farmerbraun's picture

Dead right!! Poor people should never be incentivised to work to better themselves. God forbid. They might end up not voting for the politicians who are feeding their .gov welfare habit.

Unthinkable. :-)

Big Stapler's picture
Big Stapler (not verified) jeff montanye Apr 9, 2016 4:06 PM

Good Boy Jeff! That is how your left wing college assistant professor told you to think. You even used the wording you were told to use. Good boy. Here's your scooby snack, try not to pee on the floor.

silverer's picture

I refuse to sell anything in New York State, because their sales tax system is run by the Gestapo. If you don't sell anything, you don't owe sales tax. Try explaining that to New York. Maybe they expect a patriotic donation? You should see the letters they send out. Lose your license, padlock your business, confiscate your house. You are taking money that I worked for and earned, and you didn't do jack shit for it. I always pay all taxes owed. It's your attitude that's abysmal, and I still have a choice. You certainly need me more than I need you.

Arnold's picture



".....the only rule is that the rules are whatever the Obama Administration wants them to be. The results have been slow growth, small wage gains, and a growing sense that there is no legal restraint on the political class.”"


Quite an affirmation sentence.

Do you think that Lamar would put this on their 'almost home' paying bill boards?

steveo77's picture


What is killing the oceans, indeed it is radiation, and I have found the connection.

DuneCreature's picture

Wheeeew, bro, that there is some depressing shit.

Thanks for the link, steveo77, .... as alarming as it is.

I knew something bad was up, it squares with my own local observations.

 ~ DC

PhiBetaZappa's picture

If Steve is trying to say the corpos can't find the right scumbags in .gov to pay off to increase their personal 'growth' I find that very hard to believe.

Paul Kersey's picture

"Regime Uncertainty Kills U.S. Growth"


So that's what you're blaming it on?  Other than Government subsidies, Government jobs, Government contracts, the health care/health insurance/big pharma medical complex, the military-industrial-security-complex and ZIRP subsidized home loan mortgages, what real growth (as opposed to ponzi growth) has there been in the last 8 years? Certainly not the growth of the Main Street economy or the growth in middle class wages.   

KnuckleDragger-X's picture

"Regime" is the magic word if you think about it.......

SWRichmond's picture

yes he needed to be sufficiently nerdy about it while keeping his comments on the "3 by 5 card of allowable opinion".

CarpetShag's picture

I can't afford the Wall Street Journal.

Caleb Abell's picture

Actually, you can't afford NOT to have the Wall Street Journal (or the NY Times for that matter).  

Anyone who owns a rod and reel will tell you that when you catch a fish, you need something to wrap it in.

Big Stapler's picture
Big Stapler (not verified) Caleb Abell Apr 9, 2016 3:46 PM

A single Sunday NY Times yields enough kindling to start my fireplace for three weeks. When the NYTimes finally goes out of business, I will have to use something else to get the fireplace started.

Political campaign flyers used to work, but now that all the candidates are "environmentally friendly", their lies are printed on coated paper.

TheABaum's picture

The New York Times is also a great bird cage liner, especially the Krugman pieces. 

williambanzai7's picture

Read the New York Post, it's the same shit.

Clowns on Acid's picture

If it ain't in the Post, it ain't true.

SWRichmond's picture


JHFC, this government cant even run the most basic of government functions, a judicial system which renders demonstrably fair decisions in the demonstrable majority of cases.  It can't even hide the corruption just under the surface, and now doesn't even bother to try. What makes you think they can manage a regulatory state that provides certainty?  You're not being realistic.

It's fucking ludicrous.

jeff montanye's picture

the obama administration, like the bush administration before it, is egregiously corrupt and evil.  lobbyists write laws for their corporate clients, officials routinely receive their bribes after the fact, and no perps above martha stewart and bernie madoff go to jail. corporate profits recently hit a cycle high due in significant part to the huge deficits run by governments and consumers trying to augment what wages won't provide.

so what if two drug companies, receiving in their u.s. market the highest prices for drugs anywhere in the world, can't combine to increase oligopoly and reduce what little competition remains.

imo this writer is part of the problem not part of the solution.

RaceToTheBottom's picture

We will know the end is near when everyone in power is viewed as part of the Problem.  We are still stuck in the mode that the other party is the evil one.


We need to get beyond that to the fact that there is no difference between parties.

KnuckleDragger-X's picture

It really starts with congress writing bad law to make their donors happy. Then the bureaucrats, who know which side their bread is buttered on, write even worse regulations. Sooner or later things take a shit so badly that the people start talking about public hangings, which, of course, cause the congress critters to panic and promise to 'fix' things, which makes things worse. Lather, rinse, repeat, until the wheels come off completely......

TheABaum's picture

Worse is when Congress doesn't write a law, but writs of authority to the enormous administrative superstate under the veneer of making law, so they can go home and tell their "constituents" aka vote selling serfs, that they supported the "Keeping Children Safe Act", or "Justice for Working Families Act" that uses the phrase "the Secretary shall prescribe regulations" hundreds of times, because they are too effing lazy to actually do the job of lawmaking.