Conservative Historians Weigh In: It’s Not Another Great Depression

Are the fundamentals strong, or are we a sinking ship? Reality doubtless lies somewhere between Easy Street and utter annihilation, but no single person or group has the capability of representing a completely unbiased viewpoint. We’re just not built that way.

But we’d like to be. When I started looking around for historians to interview about the resemblance between today’s financial crisis and the Great Depression, I realized that the study of history can be heavily embroiled in politics. This depressed me: I wanted facts, not more politics.

When I found Michael Hall and Larry Schweikart, proud conservatives and co-authors of A Patriot’s History of the United States, I hesitated.

We’re simply not on the same platform. They’re the Rush Limbaugh crowd; I’m Talk of the Nation. Then it hit me: I was looking for neutrality, but through what lens? These experts have a pleasing grasp of both America’s history and the optimism driving her, essential during such an emotional time. As a confused crisis sufferer in lay boots, I was ready to listen.

See what you think of their input, from a partyless perspective:

1. There’s quite a bit of talk going around that the United States economy is going to collapse. As a historian, what’s your take on this? Does the current crisis reflect the patterns of the Long Depression or the Great Depression?

Allen: During my own lifetime, I have heard about “imminent us economic collapse” several times! But it never happens. The worse time in my lifetime was the 1970s, when we had 13% unemployment and double digit inflation. Sometimes there was no gas to buy.

The present situation has not yet reached that level. I doubt it will. The 30s was our worst recent economic collapse, but compared to what? We had 25% unemployment in 1933. Today there are African countries with 75%.

I don’t think we’re there yet. During the 1920s and 1930s, there was a combination effect: Bad government moves + increased taxes + more bad government moves + increased taxes…you get the point.

There was a minimum wage hike that today would be the equivalent of hiking the minimum wage to $15/hour. We’ve had some hits in financials, but other sectors, like construction, are OK. Productivity is up, and we have yet to see a single quarter of subpar, below 0% performance.

Compare that to one Great Depression tariff bill that had an impact of -5% of GNP. The 1973 oil shocks impacted GNP -3%. Katrina impacted it by -½%.

What the government did in 1930 was so massively bad that even compounded with other policies, even with Lehman’s meltdown, we’re not even close. When your productivity is up, when you are responsible for almost 30% of the world’s production, it can’t hit the fan.

2) Do you think that, given the drastic changes that have happened in the global economy since the 1930s, another depression is even possible?

Allen: Hey, a depression is always possible! But your point is well taken. The US is not the world’s main economic player anymore. We are one of the most important of several players.
If we are weak, perhaps some of the other players take up the slack.

This was not possible in 1929, when Europe was the only other major player and they were hurting worse than us throughout the 1920s. When we failed, there was no backup, everything went down. Today we have Asia and Eastern Europe…

3) Given your understanding of American history, what do you think the best outcome could be, given the current situation? What about the worst?

Allen: The best outcome is that things stabilize after this Wall Street government buyout and we amble along at 6 or 7% unemployment and higher inflation for a few years. We begin to regain our footing.

The worst outcome is that things continue to slide down, but how far? As I stated above, in the midst of this “crisis” we are still a heck of a lot better off than we were in 1979! And much better off than 80% of the rest of the world at this moment.

I am wary of doomsday scenarios, especially in an election year!
I remember well John Kerry’s straight-faced 2004 assertion that “this is the worst economy since the Great Depression…”!

Schweikart: Government policies were at root of the 1930s Great Depression. The worst that could happen is raising taxes. If you raise taxes in light of a precarious financial situation, you drag in other sectors that weren’t affected by housing and financials.

Anglo-Americans have almost consistently run alarmingly high levels of debt. An early example is Britain during the Napoleonic Wars—it had much higher than France. We had very high debt during the Regan era.

Debt is one thing, but peoples’ perception of the system is especially important. They want to know, can I get ahead? Taxes throttle that perception. They make people think they can’t get ahead. Taxes to me are the absolute key to keeping a society running smoothly.

4) What are a few things that tend to happen when the economy gets into the kind of shape it’s currently in (from a historical perspective)?

Allen: Higher unemployment, inflation, and government intervention, thus higher taxes and increased economic inefficiency. We lose liberty in return for government “security.”

Schweikart: In the current scenario, I estimate the Dow will fall to 10,000. There’ll be another year of stock shakeouts. The housing market will level out in another 5-6 years. In the past 250 years, real estate has always come back—always.

During the Savings and Loan bailout of the 1980s, all the experts said it would cost us $50 billion. It cost us less than half that, because real estate always comes up. Once real estate flattens out, all the banks’ assets are going to start to look better. Everything turns around fairly quickly at that point.

5) Any other remarks?

Allen: We should all read the paper each day. This is a continuing saga. But my advice to the government is don’t encourage failure by guaranteeing subsidies for failure while successful taxpayer capitalists pay the tab. Don’t kill the goose that lays the golden egg. The market must be preserved.

Learn more about Michael Hall and Larry Schweikart at

  • The simple Q&As like this make me feel so much better than listening to the talking heads on the TV. Thanks!

  • I have to agree with Summer. I think you did a great job by analyzing our current situation and its aspects compared to how we were sitting in the 1920’s and 30’s. I haven’t read a single article or seen a single segment (not that my eyes are glued to the TV) that’s hit our current crisis from this perspective, but it is kind of reassuring to hear a historians point of view. My only question that I noticed is from this quote: “Bad government moves + increased taxes + more bad government moves + increased taxes”. With our government hastily making BIG decisions that could effect tax payers, is this something that could recreate the statement of the quote?