Interesting commentary in the Wall Street Journal by Fernández-Villaverde and Ohanian on errors to avoid if the U. S. is to avoid the Eurosclerosis trap (more here and here) . Many of the factors they list as retarding growth or generating stagnation fit Robert Higgs’s regime uncertainty. Regimes matter. Investment retarding regimes have long lasting effects as changes in investment always within, supplementing, and changing a production structure.
The supply side matters. Their summary, “In short, incentives to hire, invest and start new businesses need to be a priority, lest the sclerotic U.S. economic growth of the past six years returns and, as in Europe, becomes a permanent condition.”
An even better list of what to avoid and how to generate real recovery is Rothbard’s recession don’t do list. For an excellent assessment of how previous work by Ohanian provides support for Austrian interpretations of economic history see the “Hoover-Roosevelt Depression.”
