Social Security but also the Reciprocal Trade Adjustment Act, was evidently able to do just that.But other countries, such as the United Kingdom, were less successful. The response of British TFP growth to the crisis of the 1930s, in both the short and longer terms, was decidedly less positive.36 Broadberry and Crafts (1990, 2003) show that many of the policies put in place in the 1930s import restraints, the absence of an effective anti-trust policy, and the heavy regulation of public utilities, for example created enduring obstacles for productivity growth. As they put it, The response of British industry to the Depression of the 1930s was a further retreat from competition, a process already well under way from the depressed conditions of the 1920s. There was a substantial increase in concentration, brought about primarily by a merger boom during the 1920s ... Furthermore ... the 1930s saw the introduction of a General Tariff.37 In the absence of competition, rent seeking by cloistered management became pervasive. Rather than systematically restructuring, industries like cotton textiles and iron and steel were cartelized and protected from foreign competition to avoid further short-term falls in employment. For a quarter of a century, political control then swung back and forth between a hard-line Labor Government and equally hard-line Conservatives. Politics were fractionalized and fragmented. There was little serious talk of burden sharing. Policy was stop-go. Not until the 1980s was the legacy of the interwar Depression finally cleared away.These observations about political structure are not reassuring about the growth prospects of the United States today. Is its political system, with strong inter-party competition and checks on the executive, conducive to a positive response to the crisis? Or have there been changes in American politics that have rendered the political system more polarized and less capable of mounting a coherent response to the crisis?Top of pageCONCLUSIONThis analysis of impacts of the Great Depression on the long-term growth potential of the advanced economies highlights the following points. First, the impact of weak bank balance sheets and increased risk aversion on the part of lenders in the wake of the Depression was mainly felt by smaller, younger firms. But with large firms enjoying access to other sources of funding and retained earnings growing reasonably strongly after 1933, it is hard to conclude that this had a first-order impact on capital spending or output growth. Second, there is little evidence that increased public debt or policy uncertainty had major effects in depressing investment. Third, while there was extensive structural and long-term unemployment in the 1930s, this also declined relatively quickly once sustained recovery set in. Fourth, the crisis was also an opportunity, as firms used the downtime created by the Depression to reorganize and modernize their operations in ways that boosted productivity growth. But creating a policy environment where they had an incentive to do so required political compromise of a sort that can be difficult given the polarizing effects of financial crises.Mark Twain is alleged to have once said History does not repeat itself, but it does rhyme.38 There is no