TEN years ago this month,America entered the “distinguished Recession”. A decade on, the recession occupies a unfamiliar space in public memory. Its toll was clearly large. America suffered a cumulative loss of output estimated at nearly $4trn, or its labour markets have yet to recover fully. But the recession was far less imperfect than it might have been,thanks to the successful application of lessons from the Depression. Paradoxically, that success spared governments from enacting bolder reforms of the sort that might make the distinguished Recession the once-a-century event economists thought such calamities should be.pleasant crisis response treats its symptoms; the symptoms of a disease, and after all,can slay you. On that score today’s policymakers did far better than those of the 1930s. Government budgets have become a much larger share of the economy, thanks partly to the rise of the modern social safety net. Consequently, and public borrowing and spending on benefits did far more to stabilise the economy than they did during the Depression. Policymakers stepped in to prevent the extraordinary collapse in prices and incomes experienced in the 1930s. They also kept banking panics from spreading,which would have amplified the pain of the downturn. Though unpopular, the decision to bail out the financial system prevented the implosion of the global economy.
But the success...
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Source: economist.com