An undergrad from another University recently called me and asked if he could speak to me about the Great Depression. He was writing his thesis on the Depression and one component of his research was to include conversations with individual scholars in his field of inquiry. I think it is great that the kid had the guts to grab the phone and ring me up, so I gladly helped him out. It reminds me of how people asked me after my first book "How in the world did you get to meet Milton Friedman?" I said "it's easy, I picked up the phone and dialed his number." Thanks Dad.
Anyway, he asked me to provide a list of advantages that have resulted from the Depression. So I will share them with you. Consider this the Randy Parker Top 10 List of good things from the Depression:
#10 It showed bad economic policies give us bad economic outcomes (National Industrial Recovery Act anyone?).
#9 We abandoned Say's Law and the real bills doctrine for good.
#8 We provided a social safety net for those less fortunate (even though it currently is out of hand and unaffordable...stay tuned for the next 50 years and watch what happens to entitlements).
#7 We were divorced from the silly notion of having to balance the federal budget annually.
#6 We put the gold standard in the history books for good (Donald Luskin where are you?).
#5 After leaving gold we had independent economic policies and traded external balance for internal balance as we should.
#4 The FDIC obviated banks' chronic problems with the liabilities side of their balance sheets (don't worry, now they have all manners of trouble with the assets side).
#3 The Depression showed that general deflation is a macroeconomic death sentence (attention Ben Bernanke!).
#2 The Depression gave us an aggressive Federal Reserve that is not going to let the financial markets implode.
AND NOW #1
#1 The Great Depression ended Prohibition! I'll drink to that!