Question

I need information about government intervention in the economy during the Great Depression in simple words. It shoud not be less than 500 words. It can be either in fovor or opposed of government intervention in the economy during the Great Depression. Please do not just copy and paste from any website.

Answer 1

When the great depression of 1929 took place there were many views regarding the causes of it. In which many people thought that it was because of free market that great depression took place.

Although the big stock market crash occurred in 1929, unemployment never reached double digits in any of the next 12 months after that crash. Unemployment peaked at 9 percent, two months after the stock market crashed — and then began drifting generally downward over the next six months, falling to 6.3 percent by June 1930.

This was what happened in the market, before the federal government decided to “do something.”

What the government decided to do in June 1930 — against the advice of literally a thousand economists, who took out newspaper ads warning against it — was impose higher tariffs, in order to save American jobs by reducing imported goods . within six months after this intervention, unemployment rose extremely high and remained high over 1930s decade.

While market produced a peak unemployment rate of 9% after 1929 shock, it reached 20% after government intervention of 1932 and remained above 20% after 1932.

There was a similar shock in 1987. But people just forgot about it. Why? There was a difference between these two shocks. The 1929 stock market crash was followed by the most catastrophic depression in American history, with as many as one-fourth of all American workers being unemployed. The 1987 stock market crash was followed by two decades of economic growth with low unemployment. And this happened just because in 1987 no government intervention was done.

So what I believe is according to Says law of market every demand creates its own supply and if there is any disturbance it will be corrected by market forces itself. There is no need of government intervention in it. As government intervention worsens the disturbances.