The 1930's and Today
By Arnold Kling
The Washington Post reports on how economists are still debating the 1930’s. We are, but I bet I could get a pretty broad swath of economists, left and right, to agree to the following:
1. The steps that Roosevelt took to reverse the monetary contraction, including going off gold and stabilizing the banking system, were the policies that had the greatest positive effect on the economy. Those policies did the most to contribute to whatever recovery took place.
2. Fiscal policy moves were tiny by recent standards. Therefore, it would be unwise to try to gauge the effect of fiscal policy by looking at the 1930’s experience.
3. The attempts at central planning and cartelization via the National Recovery Administration were a mistake.
Interest readers are encouraged to consult Randall Parker’s two books of interviews with economists, Reflections on the Great Depression and The Economics of the Great Depression.