What Roosevelt Didn't Know By Arnold Kling

The U.S. economy survived the dotcom bubble and crash of 1999-2000 much better than it survived the stock market bubble and crash of 1929. One reason is that President Bush did a better job of sifting through economic advice than did President Roosevelt. (My early evaluation of the Bush record from a macro perspective still stands.)

One of the legends of the Great Depression is that no one knew what to do about it until John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1936. One comes away from The Forgotten Man less convinced that the state of the art in economics was inadequate. Instead, it seems that Hoover and Roosevelt were not paying attention to the better economists of the day. Had there been a Council of Economic Advisers in 1930, the Great Depression might have been avoided, even though no member of the Council would have known Keynesian terminology. My current view is that The General Theory included more ideas than were necessary to diagnose and treat the problem of the 1930's.

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