Redistribution and Economic Decline

15 Pages Posted: 14 Dec 2017

Date Written: October 16, 2017

Abstract

Economic activity is kept stable by means of explicit and implicit contracts. These contracts, in turn, carry the confidence of economic decision makers as far into the future as the free market will trust them. A change in the trust of an implicit contract leads to a decline in economic activity; if that decline, while unexpected, is manageable, the resulting macroeconomic downturn will be a recession. If, on the other hand, the negative changes are beyond what the present system of explicit and implicit contracts can manage, the recession can escalate into a depression. The line between a recession and a depression is more easily crossed when government fails as an above-market carrier of confidence.

Keywords: Decision Makers, Free Market, Recession, Depression

Suggested Citation

Larson, Sven R., Redistribution and Economic Decline (October 16, 2017). Proceedings of the RAIS Conference: The Future of Ethics, Education and Research. Available at SSRN: https://ssrn.com/abstract=3085950 or http://dx.doi.org/10.2139/ssrn.3085950

Sven R. Larson (Contact Author)

Hill City Skunkworks, LLC ( email )

PO Box 1382
Cheyenne, WY 82003
United States

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