Monday, February 2, 2009

How Government Prolonged the Great Depression

Interesting Article that argues FDR's New Deal actually prolonged the Great Depression.
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3 comments:

  1. Anonymous2/2/09, 10:55 PM

    The article brings up the good point in that if the new administration wants the stimulus package to be effective, they must target certain American companies and industries which will not only support the overall U.S. economy, but also decrease the unemployment rate. The most recent version of the stimulus package still tries to appease every special interest group: tax cuts, environmental protection, better education, etc., and by trying to appease everyone, the administration solves none of the problems.
    In regards to the author’s comparison of Obama’s stimulus package to FDR’s, I don’t know if the comparison is applicable. As stated, during this time period, America was an isolationist country, so FDR was able to implement policies which made it easier for monopolies to grow. During our era, globalization has occurred to such an extent that trying to build a monopoly in any country would by nearly impossible. Our once great car manufacturers in America, GM, Ford, etc., have become so crippled by foreign companies that this recession has all but bankrupted them.
    The stimulus package must be able to have maximum effectiveness. We don’t want an 800 billion dollar mistake. The only way to insure this is to invest in companies and industries that we know will allocate the funds in the most beneficial way, and try to restore consumer confidence through successful businesses and investments.

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  2. Tedd Parker2/4/09, 8:56 AM

    Alex, why not increase tax cuts and let the tax payers decide what is the most beneficial way?

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  3. Anonymous2/4/09, 9:34 PM

    This is one of the most logical arguments being made in the senate over the stimulus, and it is the leading point for the republicans. Supposedly, if we take the stimulus and use it for tax cuts, the consumers will begin spending and saving as if we weren’t in a recession, thus boosting the economy.
    The one downturn of this perspective is: trusting the public. Is the government certain consumers will spend this money they receive from tax breaks in the most effective way, or worse, will they save the money because of a lack of confidence in our economy?
    The closest thing to insurance the government has for this stimulus package is “businesses are in the business of making money.” Industries will be forced to invest this money in the most profit maximizing ways, which will not only boost their profits but also the economy as a whole.

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