The Great Depression
I learned a long time ago that history without economics is almost always bad history. Almost all of what you have been taught about the Great Depression is wrong. That may help explain why the man who presided over the worst depression in our nation’s history is still revered. Arnold Kling and David Henderson have updates on the event, including this:
Roosevelt was not Keynesian at all, having campaigned against government deficits and essentially sticking to balanced-budget orthodoxy. Apart from the policies on the gold standard, there was actually a great deal of continuity between the Hoover Administration and the first few years of the Roosevelt Administration in their approaches of trying to treat the Depression through industrial co-operation intended to reduce the harshness of competition.
The Depression-era government policies on wages, both of Hoover and Roosevelt, reflected the folk macro view that higher was better. The results were disastrous, as modern academic macro would predict.
When I was in graduate school, we learned that poorly-conceived government policies undoubtedly exacerbated the Depression. Some of the policies boggle the mind. Whole crops were thrown out and farmers prevented from growing food for their own use — all in an attempt to boost prices.
So why is “the man who presided over the worst depression in our nation’s history” still revered?
Perhaps he is revered because he also presided over one of the largest expansions of government power in US history?
I think it’s important that this history get rewritten and told in a way that conforms to the facts.
Amity Shlaes THE FORGOTTEN MAN. tells it fairly honestly and doesn’t pull any punches on Hoover or Roosevelt although seems a little obsessed with Wilkie.
I thought that Kling’s discussion about economists not being able to communicate (or having difficulty) to the public was an interesting comment.
There are many, many views by economists on the Great Depression. Sumner’s recent additions to the discussion are interesting.
FDR is still considered a great leader because he was not leading when the country went into the GD. The economy initially grew rapidly under his leadership, until the 1937 recession. His policies were a scattershot affair, as we had not seen a depression of this magnitude before. Still, he gave people hope as things improved. Talk with relatives who lived through it.
Steve