Robert Higgs on the Great Depression

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4.7 • 4.4K Ratings

🗓️ 15 December 2008

⏱️ 67 minutes

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Summary

Robert Higgs, of the Independent Institute, talks with EconTalk host Russ Roberts about the Great Depression, the New Deal, and the effect of World War II on the American economy. Using survey results, financial data, and the pattern of investment in the 1930s, Higgs argues that New Deal policies created a climate of uncertainty that prolonged the Great Depression. Using consumption data, he argues that prosperity did not return during wartime, but rather after the war when government intervention in the economy subsided.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. My guest today is Robert Higgs, Senior Fellow in Political Economy,
0:42.4	the Independent Institute, and Editor of the Institute's Quarterly Journal, the Independent Review,
0:47.7	Bob, Welcome to Econ Talk. Thanks, Russ. Glad to be here. Our topic for today is the Great Depression,
0:55.4	and in particular, your unusual and provocative take on the events of the 1930s and the 1940s.
1:02.5	I'd like to build our conversation around two papers you've written, both of which will be
1:06.1	available on the website for this podcast so that listeners can read them in advance or afterward
1:11.8	as you choose out there. These papers, by the way, are written in clear English, mostly devoid of
1:17.4	jargon. They can be read with profit by non-economists, which is an achievement on Bob's part.
1:25.0	And the standard view of this period, or at least one standard view of the 1930s and 40s,
1:31.4	is that the war, or two, got us out of the depression. You rejected that view in your 1992 paper
1:39.5	in the Journal of Economic History entitled wartime prosperity, a reassessment of the US economy
1:45.7	in the 1940s. What was your argument in that paper?
1:50.5	The argument takes several forms. It starts with the standard view, which is that the war
2:01.3	ended the depression because on the one hand, it brought the high rate of unemployment down
2:09.6	to extraordinarily low level by 1943-44, the lowest ever recorded. And in addition, at the same time
2:20.5	that unemployment was coming down, real growth domestic product was shooting up at an extraordinary
2:30.9	rate. And a kind of compliment to the increase in real output was that consumer well being
2:41.4	actually increased that real consumer spending rose during the war years, even though many
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