Wednesday, June 8, 2011

Shlaes the supply sider

Amity Shlaes has explored the Great Depression from the supply side, arguing that government distortion of markets and hostility towards business is key to explaining why the Depression was as deep and as long as it was. In this, she is quite different from Friedman and Schwartz, who had a demand-side explanation. I wonder if Milton Friedman would have altered his telling of the story if he had seen what Shlaes and others have written.

Her most recent article is here. She argues to understand what is wrong with today's economic policy is the same thing that was wrong with economic policy in the 1930s. Her book, The Forgotten Man: A New History of the Great Depression is essential reading for anyone interested in the Great Depression.

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