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Output fell by over 30% during the Great Depression. Unemployment was 25% and more than half of Americans did not work. The Depression lasted for over a decade. Yet, during the decade of the 1930s, life expectancy at birth increased by more than 6 years.

Now this is not likely due to the fact that the sickest and least healthy died off during the Depression. Robert Fogel has lots more to say in his excellent, Escape from Hunger and Premature Death. No doubt the Depression was no fun – but to put it in perspective – people during the Depression were forced to live like their parents lived, and that was found to be intolerable.

For thousands of years until about the 17th or 18th century, every single human being that lived pretty much expected to live like his parents did, and no one thought much of it. Further, during the Depression, a massive reallocation of labor and capital took place which set the stage for an incredible economic transformation after World War II. These dislocations are natural. Did they need to be as severe as they were in the 1930s? No.

Keep this in mind when we are being fed all kinds of disaster stories about the current economic slump.

One Response to “Great and Not Depressing Expectations”

  1. Speedmaster says:

    I strongly recommend the work/books of Julian Simon, he worked on this topic and his stuff is very readable.

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