Hoover and Roosevelt both responded to the sharp downturn "progressively" - by regulating industry, raising government spending and taxes and by promoting industrial unions. This policy mix succeeded in temporarily increasing the share of income going to the bottom 90 percent of wage earners but the maintenance of wages above market clearing levels in the face if falling prices led to massive and unprecedented unemployment that only relented when these policies were moderated after WW2.
Today, a new generation of "progressives seek to push wages above market clearing while raising taxes and limiting competition through financial and environmental regulation. But with our much more generous welfare state in place the result has not been mass unemployment but mass exit from the labor force combined with mass immigration. History shows that the center cannot hold - with one party pushing such a radical economic agenda our prosperity is unlikely to resume its trendline until a market realistic political consensus is restored.
People forget that the "Reagan Revolution" was a bipartisan return to market economics. It was foreshadowed and given impetus by the Carter-Kennedy (!) deregulation push. Given the immense hatred of markets on the left today it us hard to see how we are going to escape many years of stagnation and policy whipsawing until the old lessons are relearned.
Interesting charts and narrative at the link.
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