Peter Temin: Lessons From the Great Depression

George Santayana once wrote that those who could not remember the past were condemned to repeat it. And looking at today’s policy makers at work seeking to combat the huge challenge of unemployment in the aftermath of the Great Financial Crisis of 2008, it appears that there is a lot of collective amnesia evident amongst this crowd.

The parallels with the mistakes of the 1930s echo. Peter Temin, currently Gray Professor Emeritus of Economics, MIT, and former head of their Economics Department, has written extensively about the Great Depression. He argued persuasively in that book that the cause, spread and recovery from the Depression must be found in the monetary and fiscal policy regimes amongst the authorities of Great Britain, the US, France and Germany. The Great Depression, according to Temin, was the result of a shock to the system produced by World War I, coupled with an ideologically constrained response that exacerbated a bad situation and turned it into a crisis.