Hamilton: cut regulation, boost growth and confidence

Prof Hamilton (author of the time series bible) recommends that Obama send:

“a sweeping directive from the President to all administrative agencies that jobs really do come first. If such an announcement were made from the White House in conjunction with the four specific steps noted above [approve some energy investment projects, and do sensible cost benefit analysis], I could imagine an immediate boost to consumer sentiment and perhaps a noticeable drop in oil prices as well”.

While I agree with commenters that demand is part of the problem, I also believe that confidence is a part of the problem. Better regulation will encourage marginal business investment – and that will help a bit.

After all, the 2% real per capita growth we become accustomed is just a tenth here and a tenth there over the cycle – this economic miracle is, on average, a boring ~17bps of improvement per month.

So — next time you hear someone tell you that this or that is not a big deal as it’s low cost, tell them that the miracle of the industrial revolution is 17bps per month, and point out how quickly bad and capricious regulation will scratch suich gains.

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