Regime Uncertainty
4th March 2025
Robert Higgs coined the term regime uncertainty to illustrate the challenge faced by business under Franklin Roosevelt’s New Deal, when a flurry of unpredictable legislation such as the expansive and often unclear mandates of the National Industrial Recovery Act (NIRA), attempts at court packing, abrupt tax increases, and shifting labor policies, meant businesses couldn’t reliably forecast returns or risks. Uncertainty magnified bad policy causing investment to collapse and remain unprecedently low.
For the eleven-year period of 1930 to 1940, net private investment totaled minus $3.1 billion. Only in 1941 did net private investment ($9.7 billion) exceed the 1929 amount.
The data leave little doubt. During the 1930s, private investment remained at depths never plumbed in any other decade for which data exist.