Obama's invisible hand holds down the economy

Adam Smith's invisible hand theory held that men and women working for their own best interest will benefit society as a whole even though that was not the intention.

We've got a different sort of invisible hand at work on our economy today. And that's the invisible hand of fear and dread that is holding down the economy. We've talked about "regime uncertainty" many times before on these pages, and that phrase, coined by Robert Higgs, referred to the reluctance of businesses to expand for fear the government might inflict prohibitive costs on them.

This version of the invisible hand is pressing down on the head of the economy as it tries to reach a branch to pull itself above water. That hand is the Obama administration and the efforts to control and punish businesses to compel adherence to administration wishes. There was the automobile industry, the credit industry, and the health care industry, all undergoing major transformations to fit the government's mold. Business leaders who are not confident that Obama will approve are petrified. Thus we have a stagnant economy.

So with that in mind, we note that Thomas Sowell addressed this phenomenon, though not in those words, in a recent column. Excerpt:

The American economy usually rebounds a lot faster than it is doing today. After a recession passes, consumers usually increase their spending. And when businesses see demand picking up, they usually start hiring workers to produce the additional output required to meet that demand. ...

Government intervention may look good to the media but its actual track record -- both today and in the 1930s -- is far worse than the track record of letting the economy recover on its own. ...

As unusual as 9 percent unemployment rates may seem to the current generation of Americans, unemployment rates stayed in double digits for months and years on end during the 1930s. Franklin D. Roosevelt's administration followed policies very similar to those of the Obama administration today. He also got away with it politically by blaming his predecessor.

The best cure for regime uncertainty is regime change.

Comments

[Jordan]

that stocks bconued back from a nearly 700 pt drop and there are serious slides this week but it isn't the worse one we have had.128 point loss is steep but it is much better than the 700 that it was.The liberals running around yelling the sky is falling the sky is falling is part of the reason for this they are in a panic and DEMANDED a bailout which is only a bandaid. It might get worse but we are ok. The WHOLE WORLD is experiencing the same thing right now .so the world won't crash!Not to say it isn't serious .it is I do believe the government will handle this .and solve it eventually!BAD NEWS If OBAMA Is in though .and we will never hear the end of it that it was the republicans but it is the democrats CLINTON did this .don't be fooled into thinking different. You can't make money like we did back then and not pay for it now. IT was AMAZING the money we made during Clinton years but it was a false bottom a bubble under false economy and we were in a recession when Bush took office ..but no one says anything about THAT!There was a crash in 1970 too ..Look at history a recession is on average at this time .we go in cycles and we have ALWAYS corrected the situation within two years.Remember too this is a good thing that this weekend is a holiday weekend and all markets are closed hopefully people will step back and take a second look. We are living the housing bubble 45 percent drop right now that is a WHOLE LOT OF LIBERAL caused problems from Clinton !Stock is a sliver of a market based on earnings .companies are going to earn 40 percent less but not all companies are going to go out of business right now ..we are not going to go down.Companies are trading at muliti million dollar lows right now so that means we are going to go up! It will take time..!Just DON'T PANIC!!!!!!! We are senior citizens and we are worried about our 401 K's and stocks and we have taken a huge hit but we have done this before and it went up before and it will go up again.You cannot solve 30 years of unwinding credit being defaulted in just a few days.Not ONE BANK has lost ONE person's FDIC money .so it is really not THAT bad yet! Oh and please stop listening to the news ..they can give you facts but they are also VERY NEGATIVE! That is their business to report everything they have 24/7 to cover news and they are fighting for time! So the most outrageous they get the more viewers they get.