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(This post completes my three‐part discussion of the “regime uncertainty” hypothesis, according to which the
New Deal hampered recovery by causing businessmen to fear policy changes that might render their investments unprofitable. Links to the previous posts about regime uncertainty, and to the other posts of my series on The New Deal and Recovery
, occur at the end of this post.)
Proving It
Nothing seems more plausible, on its face, than the claim that policy shocks like those we’ve surveyed, coming as they did from a president who was often openly hostile to businessmen, discouraged investment. It’s no doubt largely owing to this, and to businessmen’s own insistence that New Deal policies frightened them, that the regime uncertainty hypothesis has gained adherents among economists.
The New Deal and Recovery, Part 12: Fear Itself SHARE 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, in
Leviathan.
Not the Sum of its Parts
So 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.