Stanford Prof.: U.S. 'Not in Anything Resembling' Great Depression
More and more academics are speaking out against the mediaâ€™s sensationalism of economic conditions.
Pulitzer-Prize winning author and professor of history at Stanford University David M. Kennedy told Bloomberg radio Nov. 18 that the current financial crisis bears no comparison to the Great Depression.
â€śWell, weâ€™re not yet in anything remotely resembling the crisis, the scale of crisis of the Great Depression.â€ť When Franklin Roosevelt took office in 19933, 13 million Americans were unemployed. â€śThat was 25 percent of the work force,â€ť Kennedy told Bloomberg host Tom Keene.
The professor laid out exactly what has changed since the troubled 1930s.
â€śEvery bank in the country was closed shut. There was no such thing as old age pensions, there was no such thing as unemployment insurance. There was no such thing as the Securities and Exchange Commission to regulate the stock markets. There was nothing like the National Labor Relations Board to keep peaceful relations between management and labor. We have a whole array of things in place now that will make this crisis much less severe than the one of the 1930s,â€ť said Kennedy.
He also looked to the past to warn against protectionism in the
â€śWe have a thick historical record of the consequences of yielding to the temptations of protectionism and isolationism,â€ť said Kennedy.
Kennedy said that in the 1930s, almost every nation in the world enacted protectionist measures, â€śthat essentially strangled international trade and deepened and worsened the crisis of the Depression.â€ť
â€śI hope weâ€™ve learned the lesson that thatâ€™s the wrong road to take, although itâ€™s always very, very tempting because you can sell [those] kind of policies, protecting jobs at home and taking care of our own first and so on,â€ť the professor said.
In 2004, economists at the University of California, Los Angeles (UCLA), studied the policies of President Franklin Rooseveltâ€™s New Deal and determined his policies prolonged the Depression by seven years.
Harold L. Cole and Lee E. Ohanian blamed anti-free market measures for the slow recovery in an article published in the August 2004 issue of the Journal of Political Economy.
Cole and Ohanian asserted that
Tom Cooley, Dean of the NYU Stern School of Business, mentioned this point in an Oct. 13 Newsweek web exclusive. â€ś[M]ost economists and economic historians now realize that FDRâ€™s experimentation and interference with markets probably prolonged the depression considerably,â€ť Cooley said.
So what would a new, New Deal do the current economy? Economist Robert Higgs told the Business & Media Institute Oct. 29 that he â€ścannot imagine a worse course of action, short of outright socialization of the entire economy. The measures comprised in a new New Deal will not hasten general economist recovery, but will only bulk up the power of government and transfer income to privileged interest groups at the expense of taxpayers and consumers.â€ť