Question

In: Economics

1.a. Discuss how welfare capitalism was used to weaken labor unions. (Be sure to define welfare...

1.a. Discuss how welfare capitalism was used to weaken labor unions. (Be sure to define welfare capitalism)

b. Discuss how the great depression was both similar and dissimilar from the great recession

Solutions

Expert Solution

1 a ) Welfare capitalism is capitalism that includes social welfare policies.Welfare capitalism is also the practice of businesses providing welfare services to their employees. Welfare capitalism in this second sense, or industrial paternalism, was centered on industries that employed skilled labor and peaked in the mid-20th century.

Today, welfare capitalism is most often associated with the models of capitalism found in Central Mainland and Northern Europe, such as the Nordic model, social market economy and Rhine capitalism. In some cases welfare capitalism exists within a mixed economy, but welfare states can and do exist independently of policies common to mixed economies such as state interventionism and extensive regulation.

2 b ).  

The main causes of the Great Depression and Great Recession lie in the actions of the federal government. In the case of the Great Depression, the Federal Reserve, after keeping interest rates artificially low in the 1920s, raised interest rates in 1929 to halt the resulting boom. That helped choke off investment. Also, President Hoover signed into law the sky-high Smoot-Hawley Tariff, which stifled trade and damaged American exports throughout the 1930s. Finally, the President signed a large tax increase into law in 1932, which halted entrepreneurship.

The seeds of the Great Recession were planted when the government in the 1990s began pushing homeownership, even for uncreditworthy people, with a vengeance. Mortgage-backed securities built on dubious mortgage loans became “toxic” when the housing market took a downturn, and many American banks verged on collapse. The government’s urgent desire to bail out various banks and corporations created uncertainty and instability, and this may have widened the recession.


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