Rothbard's America's Great Depression example essay topic

America's Great Depression i. America's Great Depression Essay, Research Paper i. I just finished reading the third volume of Schlesinger " sAge of Roosevelt (I think he gave up on later volumes, so I guessI'm done! ). And then I re-read Rothbard's America's Great Depression while my regressions were running. AGD now seems to me to be a mixed bag.

On the one hand, the theory chapters at the opening are very weak. It seems to me that he could have written a much clearer book if he just clearly explained the classical view that unemployment is caused by excessive real wages and used that as the theoretical underpinning for the rest of the work. To his great credit, he did explain this point, butt deserved much more attention. Instead he focused on the Austrian theory of the business cycle, which makes less and less sense the more I think about it.

I think Jeff Hummel wrote a critique where he said that it is really a theory of sectoral shifts rather than depression. If, as in the Austrian theory, initial consumption / investment preferences "re-assert themselves,' why don't the consumption goods industries enjoy a huge boom? Afterall, if the capital goods factors have had their prices bid too high, have not the consumption goods factors had their prices bid too low? Moreover, I can't figure out why Rothbard thinks businessmen are so incompetent at forecasting government policy. He credits them with entrepreneurial foresight about all market-generated conditions, but curiously finds them unable to forecast government policy, or even to avoid falling prey to simple accounting illusions generated by inflation and deflation. Even if simple businessmen just use current market interest rates in a completely robotic way, why doesn " t arbitrage by the credit-market insiders make long-term interest rates a reasonable prediction of actual policies?

The problem is supposed to be that businessmen just look at current interest rates figure out the PDV of possible investments, and due to artificially low interest rates (which can't persist forever) they wind up making mal investments. But why couldn't they just use the moneymarket's long-term interest rates for forecasting profitability instead of stupidly looking at current short-term rates? I also can't overlook his bizarre claim that inflation prevents the dispersion of productivity gains throughout the economy. It may lead to a different dispersion that would otherwise occur, but that is a very different matter. On the other hand, I still think his historical treatment of the Hoover presidency is just great. And interestingly, all of the specific facts Schlesinger describes support Rothbard's interpretation of Hoover as proto-New-Dealer, which is why Schlesinger is forced to "interpret' the facts such a large proportion of the time rather than simply stating them.

I think you wrote a Critical Review piece in which you criticizedRothbard's emphasis on Hoover's efforts to keep up wages. ButI still think it makes a lot of sense. Actually, reading Rothbard in tandem with Friedman's monetary history gives two surprisingly consistent perspectives. Rothbard shows the harm of wage rigidity, while Friedman shows the effects of monetary contraction given wage rigidity. Rothbard's point is really necessary for Friedman " sto make sense, because a massive monetary contraction and velocity decline created only a brief recession in 1920-21 (as Friedman himself notes in a somewhat puzzled manner). And while Rothbard grossly underrates the negative effects of the monetary contraction given wage rigidity, Friedman seems to seriously underestimate the extent to which the Fed did try to counter-act the monetary contraction.

I'm embroiled in my empirical work now. It's coming along, and seems like it may produce some interesting results. I'll keep you informed.