Our work is only possible through the generosity of private philanthropy. Find out how you can support our mission and can contribute to our work.
Join the HJS mailing list and keep up to date.
This is an event summary of a speech given by Barry Eichengreen, Professor of Economics and Political Science at the University of California-Berkeley, on 20 January 2015. It reflects the views expressed by the speaker, not those of The Henry Jackson Society or its staff.
On 20 January 2015, Professor Barry Eichengreen presented his book Hall of Mirrors: The Great Depression, The Great Recession, and the Uses – and Misuses – of History to an audience at the House of Commons. Professor Eichengreen explained how knowledge of the Great Depression of 1929-1933 shaped responses to the 2008 global recession, and conversely, how the recent crisis will likely re-shape writing of the Great Depression. The book finds that while the Great Depression has has, on the one hand, allowed policy-makers to better respond to the recent recession, it has, on the other hand, allowed the failure to adopt more systematic and far-reaching post-crisis economic and financial reforms.
Lessons learned from the Great Depression
History is a lens through which leaders and policy-makers view current problems and the past provides lessons that inform decisions in present-day crises:
Lessons not learned from the Great Depression
The experience of the 2008 recession has prompted many to question conventional wisdom claiming that the Great Depression was a result of avoidable policy failures that had since been corrected:
In response, policy-makers rushed to prevent the failure of other financial institutions: governments provided capital and liquidity to distressed financial institutions, central banks flooded financial markets with liquidity and global leaders congratulated themselves on avoiding another Great Depression. The results of those policy initiatives, however, have been less than fully successful: post-crisis recovery in the US has been lethargic, proceeding at half the rate of a normal recovery; Europe has experienced a double-dip recession; and, partly as a result of a historical fear of inflation, austerity has become the norm.
Lessons for the Eurozone Crisis
Policy-makers’ success in preventing another Great Depression also arguably led to a widespread failure to do more to support a more vigorous recovery and, as such, there is a strong argument for unconventional policies to promote recovery in the Eurozone: