The Forgotten Man: A New History of the Great Depression
Publisher: Harper Perennial (May 27, 2008)
Paperback: 512 pages
I have been meaning to blog on this book for about a month, but between one thing and another have not gotten around to it. Since then the global economic crisis has loomed ever larger.
I enjoyed reading the book and about 50 pages from the end put it down for a while, because I realized there were not enough pages left to take this story into the early years of US involvement in World War II, when the US finally really came out of the Great Depression (except for the Stock Market, which took much longer to recover).
The book is not, to me, an economic history so much as a social history and a review of the players in the New Deal, to include their backgrounds. The author spends a fair amount of time on the main economic alternative, which was the Soviet model. The Roosevelt Administration's New Deal included leaders who had visited the Soviet Union in the 1920s, to see what was going on. Mentioned in the books is The New York Times reporter in Moscow, Walter Duranty, who provided the readers of the day with a very positive view of the Soviet Union. In 1932 his reporting won him a Pulitzer Prize. Much of what he wrote has since been called into question.
The heart of the book flows from period to period. Each chapter heading includes the unemployment rate for the period. None of those numbers are pretty and all are worse than our current unemployment rate, which sits at 7.6%, but will likely be worse when the numbers are released by the Department of Labor early in March. But, still, likely not as bad as any month during the Great Depression.
Given the general collapse across the globe, many are concerned that this is the worse economic crisis since the Great Depression. I am not sure that is true, but it is something we need to be concerned about.
The heart of the controversy surrounding the book turns on if we believe the New Deal ended the Depression or prolonged it. There is a paper out of UCLA that talks to this issue from the "prolonged the Depression" point of view. A UCLA 2004 news release says:
Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.The law in question was the National Industrial Recovery Act (NIRA).
While there are big question as to if FDR and his advisors were Keynesians, today we cage the discussion in terms of Keynesian economics. Professor and NYT Columnist Paul Krugman is one of the most vocal advocates for the Keynesian approach. He basically believes the $787 Billion dollar stimulus package is only one-third of what we will need. And, our own Left in Lowell blog site advocates for the FDR approach.
The other approach believes that action is needed, especially with regard to failed banks--one of the things that is needed in a depression is to get the credit flowing again--but that a Keynesian stimulus is not the answer. That view is that running up the debt does not solve the problem. That is mostly advocated by Troglodytes and others who live in caves and eat little children for dinner. What can I say?
A CNN poll, reported by Consumer Reports, shows that on 20 February 53% of the American People believe the Stimulus Package would help the economy and 44% thought it would not. That left 3% who were in the dark, which is a pretty small number.
In sum, I liked the book and thought it opened a new view on what has become received wisdom, with little dissent. Reading the book is a chance to think again about a very important question. What is the best path out of a Recession or a Depression.
Regards -- Cliff