Posts Tagged The Great Depression
It’s become an accepted as fact among many on the right that the New Deal actually prolonged the Great Depression. It’s a concept that was popularized by Amity Shlaes book The Forgotten Man. Shlaes’ book caused a sensation on the right but has been repeatedly debunked for using a set of employment figures the were inaccurate (they excluded millions of people with jobs) and for measuring economic growth solely by the Dow while ignoring GDP and other measure of economic growth. I mention this because in recent weeks, people on the right have taken to repeating these lies. For instance this article,Thomas Sowell writes:
The American economy usually rebounds a lot faster than it is doing today. After a recession passes, consumers usually increase their spending. And when businesses see demand picking up, they usually start hiring workers to produce the additional output required to meet that demand.
That’s accurate as far as it goes. Recessions caused by financial crashes are different creatures. I’m sure someone with a PhD in econ could explain all the details and reasons but for our purposes it’s sufficient to recognize that the Great Depression and the Great Recession are not examples of normal economic downturns; we can’t expect them to behave like normal downturns. Among other things, interest rates at rock bottom should stimulate the economy and they’re not. Read the rest of this entry »