Joseph E. Stiglitz describes how the Depression, spurred by war spending, delineated a move from an agricultural society to one dominated by manufacturing:
Today we are moving from manufacturing to a service economy. The decline in manufacturing jobs has been dramatic—from about a third of the workforce 60 years ago to less than a tenth of it today. The pace has quickened markedly during the past decade. … As in 1937, deficit hawks today call for balanced budgets and more and more cutbacks. Instead of pushing forward a structural transition that is inevitable—instead of investing in the right kinds of human capital, technology, and infrastructure, which will eventually pull us where we need to be—the government is holding back. Current strategies can have only one outcome: they will ensure that the Long Slump will be longer and deeper than it ever needed to be.
Jim Manzi complicates the point:
The proportion of Americans working on farms has been in continuous decline since at least 1800, when about three-quarters of the labor force was in agriculture. The decade with the biggest reduction in this proportion appears to have been the 1840s, when the percentage of the workforce in farming went from 67.2% to 59.7% (a reduction of 7.5 points). … The Great Depression occurred around the middle of a century-long, steady decline in the percentage of the labor force on farms. How could this decline have been the special cause of a spectacular economic collapse that occurred in one of these ten decades, but in none of those before or after?
Arnold Kling also questions Stiglitz's numbers and his conclusion:
In the long run, new patterns of specialization and trade have to be established. But we do not know what those will be. Government does not know, either, so its fiscal policy is a very clumsy instrument.
Nick Rowe and Ryan Avent pile on.
The Dish 