US policymakers should try everything

Berkeley

WHEN it became clear in late 2008 that the global economy was headed towards a crash at least as dangerous as the one that had initiated the Great Depression, I was alarmed, but also hopeful. We had, after all, seen this before. And we also had a model for how to mitigate the damage; unfortunately, policymakers left it on the shelf.

For three and a half years following the start of the Great Depression, US President Herbert Hoover's top priority was to balance the budget, trying - but ultimately failing - to restore business confidence. In 1933, newly elected President Franklin D Roosevelt changed course, adopting a simple yet radical strategy: try everything that might boost demand, increase production, or reduce unemployment - and then keep doing the things that work.