The Great Depression

           Many say the Great Depression was fixed by the government’s intervention, but I disagree.  The government and presidents during the great depression just made things worse and continued our economy on a path that took a great deal to fix.  One example that we learned in class is how the private industry’s building of railroads did better then when the government built railroads.  The government intervening actually hurt free market economy and almost took it out of existence.

I think the FED had the biggest part in hurting our free market economy.  It was to involved in running our economy financially and created problems that eventually led to the stock market crash.  If the government would have just concentrated on fixing our nations debt after world war one and two instead of trying to intervene in our economy we would have been better off. 

Hoover and Roosevelt both hurt our economy with their high taxes, tariffs, and their implementing high wages and minimum wage.  Hoover made wages higher, which led to higher unemployment.  Hoover also created the Smoot-Hawley Tariff, which started a trade war among other countries.  This hurt our economy because now we were not trading as much with other countries.  Lastly Hoover increased taxes and the top bracket got the worst of the taxing.  This made it so business owners had dis-incentive to grow there companies and create more jobs.  It was just not Hoover hurting our economy though; Roosevelt also had a part in it also.  Roosevelt actually increased taxes more than Hoover had.  He also created many New Deal Programs.  Some which may have helped a little, but others were disastrous.  Some of the job programs he created were dangerous, but he did nothing to stop it or help it.  One great example of this is when he sent the bonus army down to Florida to build bridges and such and he was told it was hurricane season and to take the men out but left the bonus army there and over 200 men were killed.  Roosevelt also took away some private contracts and gave them to the government: one example of this is the delivering of Air Mail.  Roosevelt also tried to stop competition and raise wages thinking this would end the depression.  The things these two men did in all reality hurt our economy more than them just sitting back and letting our free market economy fix itself.

The government was just to involved in our economy during the Great Depression and in my opinion actually made the recovery worse.  If the government would have just concentrated on the debt problems and other things they really needed to do and left the free market to fix itself the economy would have been better off.

Growth of the Economy

           The key institutions I would put in my economy to make it prosper and prevail are property rights, free trade, rule of law, and free markets.  These are just a few of the institutions of economic growth I would pick to help the economy.

            Property rights are extremely important for economic growth.  The constitution created property rights and helped set us on our way to creating a better economy.  Property rights allow us to keep the fruits of our labor.  The right to property is also the key institution to the establishment of a free market economy.  Without the right to property a free market economy would be replaced by another system.

Through the commerce clause the Constitution created a large landmass where trade was able to freely flow.   Free trade allows us to trade across state lines without being taxed.  This helps our economy by keeping costs lower and also helps avoid tax wars.  We saw how in the founding father’s day not having free trade created contention among the colonies.  So creating a free trade stimulates the flow of goods in the economy.

Rule of law makes it so we have consistency over time.  It helps prevent corruption, some examples are of governments changing the laws or taking property.  Entrepreneurship in the United States is hard and we have the rule of law, other countries without the rule of law and property rights have no guarantee for their business.  So the rule of law is a major part of a stable and growing economy.

Free markets help our economy grow and help for creating better quality products and also newer technology.  The idea of a free market economy was expressed in the Declaration of Independence.  Free markets also allow entrepreneurship to flourish, which in return stimulates our economy.  In a free market economy the Invisible Hand influences people with self-interest to act in the interest others.  The free market coordinates the resources of millions of people around the world to create an item.  So the free markets help our economy greatly and without it we would be just another country in poverty.

So in conclusion my economy would flourish by having property rights, free trade, rule of law, and a free market economy.  Without these great institutions my economy would be in poverty and not have a chance to grow.