Worse than the Great Depression

Viewed from a global perspective, economic conditions are deteriorating faster than they did in the glory days of Herbert Hoover.

Published April 6, 2009 8:40PM (EDT)

You can make a case, write economists Barry Eichengreen and Kevin O'Rourke at VoxEU, that the current economic contraction does not yet compare in full ferocity to the Great Depression, if you limit yourself only to looking at the United States.

But the same is not true if you take a global perspective. Worldwide, industrial production, stock prices, and trade are falling as fast or faster than they did during the Great Depression. The figures are especially stark for trade.

World trade is falling much faster now than in 1929-30. This is highly alarming given the prominence attached in the historical literature to trade destruction as a factor compounding the Great Depression.

On the positive side, Eichengreen and O'Rourke claim that the "policy response" worldwide is smarter and more agile than it was in the 1930s. Governments have been quicker to cut interest rates and boost the money supply and are much more willing to run fiscal deficits. But that's small consolation when one realizes sadly that it is time time shelve the old standby that's served us so well for almost exactly a year: "since the Great Depression."

It's time for a new catchphrase! How about "since the Dark Ages?" Or "since the fall of Carthage?"

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works Wall Street