The latest issue of the Cato Journal contains articles written in honor of Richard K. Vedder. Professor Vedder is an eminent and prolific free-market political economist who has written and lectured on a broad variety of topics from the high cost of higher education to the causes of the Great Depression. He is also strongly sympathetic to the Austrian school of economics. In his own contribution to the issue, Vedder writes:
I will go to my death believing the single most important factor in causing the Great Depression was discoordination in labor markets (too high wages) caused in large part by government policies such as the Hoover-Roosevelt high-wage-policy.
The thesis that the Great Depression was caused by aggressive government intervention in labor markets was first articulated by Murray Rothbard over fifty years ago and more recently was advanced by UCLA macroeconomist Lee Ohanian. Vedder’s work in this area also lent powerful support to Rothbard’s position. The Rothbardian position stands in direct opposition to the prevailing view that the Great Depression was generated by the Fed’s deflationary policies in the early 1930s. The latter view was originally proposed by Milton Friedman and Anna Schwartz and today is held by everyone from Ben Bernanke to nominal GDP targeters such as Scott Sumner.
