Sumner on the Great Depression
Scott Sumner has begun blogging about his manuscript that he has been working on regarding the Great Depression, which is something I’m very interested in reading. He is apparently going to spend two months or so blogging about it…which should be quite interesting (for econ nerds like me).
I’m not interested in producing a narrative that fits anyone’s ideological bias. Right-wingers may not like the first half of the book. As I indicated, I think Hoover’s supply-side screw-ups were secondary factors. If NGDP falls in half, you’ve got a major depression on your hands, regardless of trade, tax and wage policies. Look how much trouble we’re having adapting to a 3% fall in NGDP in the 12 months after July 2008.
Left-wingers won’t like the last half of the book, as I attribute the slow recovery to FDR’s high wage policies. But although I have a right wing reputation, FDR comes off far better in the narrative than Hoover. Much of it is devoted to FDR’s dollar devaluation policy, which Keynes correctly called “magnificently right.” In contrast, Hoover did absolutely nothing right. He didn’t intervene where he should have (monetary policy) and the areas he did intervene just made things worse. No single ideology was capable of creating a disaster this big (Just as WWII in Europe was jointly produced by Hitler and Stalin.) The first half of the Depression was a failure of right wing economics, as it was conceived at the time. The second half was a failure of left wing economics, circa 1935. If a single screw-up was capable of creating a Great Depression, we would have had many of them. Instead, this 12 year Depression was three times as long as any other Depression in American history.
But the cryptic suggestion Sumner makes in the beginning of the post is the most interesting to me:
And I can’t very well do my narrative in reverse order, like a Hollywood movie with flashbacks. (Or can I . . . )
I think that type of sequencing would provide much more powerful imagery, and be much more interesting to read. It would probably be more complex from a “threading” standpoint, but if Scott happens across this blog, I’d be more than happy to help him! =]