The American has a thoughtful article about sunk capital, and the dangers of the government sucking it dry.
It’s a classic time-consistency problem: People invested in capital because they trusted that the rule of law would protect their investment. But there’s nothing they can do to move or undo that investment, so the government sees no cost to breaking its promises. Wrong. We need people to keep investing in capital, to improve our society and economy, or even just to replace decaying capital. When investors see yesterday’s promises being broken, they are much less likely to invest today.
(Via Power Line.)
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