The New Deal and Recovery, Part 12: Fear Itself

George Selgin" This great Nation will endure as it has endured, will revive and will prosper. …[T]he only thing we have to fear is fear itself. "—FDR, in his first inaugural address." There is no place for industry; because the fruit thereof is uncertain. "—Thomas Hobbes, on the state of nature, inLeviathan.Not the Sum of its PartsSo far, I ' ve tended to look at the New Deal as a set or sequence of distinct government policies and programs, remarking on how each either contributed to or hampered economic recovery. I ' ve also dealt only with those New Deal policies generally understood to have had promoting recovery as their aim.But the New Deal was more than just a bunch of policies. As its very name indicates, it purported to be, and in important respects it was, a novel policyregime, that is, a different overall approach to combating the depression, and to economic policy more generally.The advent of a new policy regime, and expectations or apprehensions it inspires, can have economic consequences beyond those of any particular policies that march under its banner. Uncertainty regarding possible regime changes can also have important economic consequences.In this and the next installment to my New Deal series, I discuss the bearing of regime change, and regime uncertainty, on the course of the recovery. As we ' ll see, although the arrival of the New Deal regime had some beneficial effects beyond those attributable to any particular policies, the opposite was also t...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs