The Great Depression of the 1930s created a greater reliance on federal government policies than previous American eras. However, current economists have concluded The New Deal actually prolonged the Great Depression. The Great Recession of 2006 may have been caused by government policies. Read the article below: https://classroom.aspen.edu/d2l/common/dialogs/quickLink/quickLink.d2l?ou=75804&type=coursefile&fileId=CRA+AND+Great+Recession.pdf http://money.cnn.com/2016/10/05/news/economy/us-recovery-slowest-since-wwii/
Is there an argument to be made the role of government in the economy should be reduced? Explain why or why not.
A catastrophic economic downturn known as the Great Depression that started in 1929 and lasted the whole 1930s. A higher reliance on federal government programs than in earlier American eras was a result of the Great Depression’s devastating effects on American society and the economy.
The role of the federal government in the economy was relatively small prior to the Great Depression, and laissez-faire economics—which promoted minimum government involvement in economic affairs—was the dominant ideology. Thoughts and economic theory underwent a tremendous shift as a result of the depth and duration of the Great Depression. Many People lost faith in the free-market system as a result of the economic crisis and turned to the federal government for assistance.
After assuming office in 1933, President Franklin D. Roosevelt put in place a number of federal government programs meant to stabilize the economy and help those who were most impacted by the Depression. These measures included the New Deal, a set of initiatives and regulations created to advance economic growth, job creation, and social welfare. The Agricultural Adjustment Act (AAA), the Social Security Act, and the Civilian Conservation Corps (CCC) were a few of the most noteworthy New Deal initiatives.
The New Deal signaled the start of a more interventionist approach to government and constituted a considerable break from earlier American economic policies. With a variety of policies and programs, including greater public expenditure, governmental regulation, and the establishment of new federal agencies, the federal government got more involved in the economy.
The Great Depression and the New Deal had a profound and long-lasting effect on the federal government’s position in the economy. The post-World War II era saw the federal government continue to have a bigger role in the economy through greater public spending, government regulation, and the development of social welfare programs. The federal government is still actively involved in the economy today through a variety of policies and initiatives, including monetary policy, regulation, and taxation.
Economic development and prosperity, according to some economists, would increase if the government played a smaller role in the economy. Government interference, according to them, might skew market incentives and lead to inefficiency. This point of view contends that companies need to be free to operate without interference from the government and that the market ought to be permitted to set prices and allocate resources. This viewpoint is frequently linked to neoliberalism or free-market economics.
Others, however, contend that in order to address market imperfections and advance social welfare, government involvement is required. They contend that unchecked markets can result in externalities like pollution, monopolies, and inequality. This point of view contends that governmental actions like taxes, subsidies, and regulations can improve the efficiency and fairness of the economy. This point of view is frequently linked to social democracy or Keynesian economics.
In the end, the role of government in the economy is a complicated matter that necessitates careful consideration of a variety of issues, including the particular setting, economic conditions, and social goals. It is crucial to understand that there is no one answer to solve all economic difficulties and that several strategies may be effective depending on the situation.