The Great Depression
By Arnold Kling
The Great Depression continues to be a fascinating period to study. As Thomas Sowell points out, the myth is well entrenched that the New Deal pulled the economy out of the Depression.
Only now has a book been written in language that non-economists can understand which argues persuasively that the policies of the Roosevelt administration actually prolonged the depression and made it worse. That book is FDR’s Folly by Jim Powell. It is very readable, factual and insightful — and is endorsed by two Nobel Prizewinning economists.
Another interesting book is Randall Parker’s Reflections on the Great Depression. The economists interviewed in the book, all of whom lived during the Depression, agree that the second World War, not the New Deal, revived the economy. The economics profession tends to view the New Deal as a mixed blessing at best.
Finally, this month’s American Economic Review has an article by Alexander J. Field, who argues that when the Depression is measured from 1929 through 1941, rather than from 1929 through 1937, productivity growth was unusually rapid. Field calls the 1930’s “the most technogically progressive decade of the century.” If he is correct, then this is an interesting similarity with our current productivity-cushioned recession (aka the jobless recovery).
For Discussion. If productivity growth was rapid during the Great Depression, then does this undermine the argument that the New Deal had adverse impacts on the economy?