Richard Epstein

The Road to Economic Perdition

The recent onslaught of disappointing economic and political news continued to bring gloom and doom to the United States this past Labor Day weekend. With unemployment rates still hovering over 9 percent, all eyes anxiously cast about for a solution—a solution made more urgent when all the forward-looking indicators point in the negative direction.

What then should be done?

In Monday’s Labor Day speech, President Obama did not tip his hand. The short answer is to reject the most common suggestions, such as those for grandiose government initiatives put forward on a weekly basis by the New York Times. Congress should not rush to pass dumb legislation. The Federal Reserve should avoid unsound macroeconomic forays. Congress and the president should work hard to undo counterproductive labor market regulations.

Let’s start with dumb legislation. It is always tempting to promote bold legislative reforms as short-term economic relief. Congress is now posed to pass the America Invents Act, a patent reform bill that favors large firms at the expense of small-startups in the technology sector. The patent protection of these startups will be systematically eroded under the new legislation. President Obama has urged Congress to pass this act so that jobs can be created. For a powerful demonstration of the multiple errors in this legislation, readers should take a close look atfour articlesthat Hoover fellow and patent scholar Scott Kieff wrote on the legislation several months ago.

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(photo credit: Florian Knorn)

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