With the U.S. unemployment rate hitting a 25-year record high of 9.4 percent in May, economists have expressed pessimism about the future of the economy, but were quick to draw distinctions between the current recession and the Great Depression.
Speaking at the Cato Institute’s “Lessons from the New Deal and Great Depression” seminar, Economics Professor Harold Cole of the University of Pennsylvania told the audience, “You want to be careful about comparing the current [recession] with the Great Depression…The Great Depression was much worse.”
Cole explained that during the Great Depression both unemployment and productivity fell drastically, while this recession has not shown a dramatic decrease in productivity.
East Carolina University Professor Randall Parker said that he believes unemployment rates will eventually level off, but at a much higher percentage than the United States has been accustomed to in the past. “Seven and a half is the new four and a half,” said Parker, referring to the four and a half percent unemployment rates common in the late 1990’s and early 2000’s.
The panelists discussed the practicality of implementing economic policies reminiscent of the New Deal, in which the government enforced many anti-Capitalist measures with the hope of revitalizing the economy during the Great Depression.
While the speakers praised certain New Deal policies, like the federal relief program and road construction, they were also wary.
“The story of the ‘30’s…is the story of a recovery that chose to stay away,” said journalist Amity Shlaes, author of The Forgotten Man: A New History of the Great Depression, implying that government regulations may have slowed the economy’s revival.
“To love the New Deal too much is a form of nostalgic self-indulgence…To overdo it is too risky for the United States,” Shlaes added.
However, increased government regulation of businesses and interference with the free market is likely in the near future, said Jeffrey Rosen, a law professor at George Washington University and the legal affairs editor of The New Republic.
“There is not going to be a whole lot of sympathy on the U.S. Supreme Court [for Libertarian conservatism],” said Rosen, referring to the current composition of the Supreme Court. “We are Constitutionally defenseless.”
Alana Goodman is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.
