Great Depression

I do not believe that failure of the free market caused the Great Depression. President Hoover was the President when the Great Depression started and he was not a practitioner of a free market economy as the Smoot-Hawley act proves. The ‘high-wage’ policy of the Hoover administration and the trade unions succeeded only in pricing workers out of the labor market, generating an increasing circle of unemployment.” Hoover signed the Revenue Act of 1932. The largest tax increase in peacetime history, it doubled the income tax. Can any serious scholar observe the Hoover administration’s massive economic intervention and, with a straight face, pronounce the inevitably deleterious effects as the fault of free markets?

 I do not think government intervention is what helped us out of the economy.  Some economists have estimated that the NRA boosted the cost of doing business by an average of 40 percent. Roosevelt helped some get jobs but it was his wasteful spending and other meddling that kept people out of jobs and the Depression prolonged. The genesis of the Great Depression lay in the irresponsible monetary and fiscal policies of the U.S. government in the late 1920s and early 1930s.

Lesson 6 Essay

If I were to create my own city, it probably wouldn’t last very long. I would try to have a few things keep the economic prosperity alive such as making sure everyone has their property rights. As we talked about in class, the scripture in D&C says that “We believe that no government can exist in peace, except such laws are framed and held inviolate as will secure to each individual the free exercise of conscience, the right and control of property, and the protection of life.” I think making sure everyone has their natural rights is very important. Without the right of property, protection of life and free exercise of conscience, the government and city would fall apart. Making sure everyone has their own property rights and their own natural rights is one of the most important things about having a free and working country.

In the essay ‘The Success of an Idea’ he talks about the invisible hand and its responsibility in the market system. I think the invisible hand is important in helping things run smoothly. The invisible hand guides each self-interested market participant to act in the interests of others. The invisible hand directs resources to their best use. The story of the pencil helps shows how the free market system works. The invisible hand was behind the cooperation of so many people working together to make something simple like a pencil. Not just one person knows how to make the pencil, working together is what makes the simple product. The coordinating effects of the market system create more abundance out of the scarcity we are given than the centrally planned alternative. I would have a free market system to help things run smoothly in my city.

The third that would be important would be technological change. Technological change helps making workers more productive. You need to have a strong human capital with the knowledge and skills to have technological changes. This helps find the better ways of organizing existing labor, capital, and land.  Technological change can produce more with the same amount of resources. This helps keep the economy going and growing and helps create more entrepreneurs. In countries with entrepreneurs we see implementation of technology and wealth creation, whereas, in countries without entrepreneurs we see stagnation.