Handout – “FDR Met Social Needs and Saved the Profit System” … questions to discuss (1) What evidence is provided that the New Deal saved capitalism and private businesses? (2) From the article, how effective has the Social Security System been in the United States?

Reform Programs - Social Security Act - (1) Monthly retirement benefit to those 65 and older (today you can receive it at 62, 65, or 68) - (2) Unemployment insurance to the temporary unemployed - (3) Modest welfare payments to the needy, disabled, and poor mothers w/ dependent children

New Deal Comes Under Attack - Communism in America (1930’s) … - Supreme Court Reacts (1936) … - Court-Packing Plan (March, 1937) … - 1938 Midterm Election & end of the New Deal … Roosevelt “Trying to Change the Umpiring”

Legacy of the New Deal [1] The Safety Net   [2] Government Intervention into the nation’s economy - “Laissez-faire” Economics is Dead [3] On-Going Debate about the Role of Government in Society

** Supply-side Economics ** If the government lowers taxes, businesses and consumers would spend and invest more money, causing the economy to grow ** Keynesian Economics Keynes’s solution: Government should increase spending in the short-term, spending on projects and employment programs to encourage economic activity ** A failure of aggregate demand: Meaning, “private businesses were not hiring and consumers were not buying products.” Calvin Coolidge Franklin Roosevelt

Calvin Coolidge

Supply Side Economics

** Supply-side Economics ** If the government lowers taxes, businesses and consumers would spend and invest more money, causing the economy to grow ** Keynesian Economics Keynes’s solution: Government should increase spending in the short-term, spending on projects and employment programs to encourage economic activity ** A failure of aggregate demand: Meaning, “private businesses were not hiring and consumers were not buying products.” Calvin Coolidge Franklin Roosevelt

** Supply-side Economics ** If the government lowers taxes, businesses and consumers would spend and invest more money, causing the economy to grow ** Keynesian Economics Keynes’s solution: Government should increase spending in the short-term, spending on projects and employment programs to encourage economic activity ** A failure of aggregate demand: Meaning, “private businesses were not hiring and consumers were not buying products.” Calvin Coolidge Franklin Roosevelt

Deflation

** So what ended the Great Depression? 1920 – 5.2% 1928 – 4.2% 1930 – 8.7% 1932 – 23.6% 1933 – 25% 1934 – 21.7% 1936 – 17% 1938 – 19% 1940 – 14.6% 1942 – 4.7% 1944 – 1.2% 1946 – 3.9% - In 1934, the national government deficit increased to $2.9 billion.   - In 1937-1938, the deficit fell back to $100 million. - During 1939, the deficit rose back to $2.9 billion. - At the height of government spending during WWII, the national deficit was at $54.5 billion in 1943.

So … Deficit government spending by the U.S. government, that is, spending more $$$ than what the government receives in taxes – or Keynesian economics – is what ended the high levels of unemployment associated with the Great Depression. And … This is generally what France, Great Britain, and Germany did to get out of the Great Depression

But what about … “How Did We Get Out of the Great Depression But what about … “How Did We Get Out of the Great Depression? | Hillsdale College Econ 101” https://www.youtube.com/watch?v=LaLPTo0Lt3g An economist tries to explain what ended the Great Depression … Pay attention to comments relating to … Blowing up tanks in the Mohave Desert & troops in Central Park “How the real world works” WWII rationing comments

Consumption Investment Government Spending C + I + G = GDP

But what about … “How Did We Get Out of the Great Depression But what about … “How Did We Get Out of the Great Depression? | Hillsdale College Econ 101” An economist tries to explain what ended the Great Depression … Pay attention to comments relating to … Blowing up tanks in the Mohave Desert & troops in Central Park “How the real world works” WWII rationing comments

Really?? ** Reduced unemployment and ended the Great Depression … So this guy thinks … Increased international trade Fewer government regulations Lower corporate and personal income tax rates ** Reduced unemployment and ended the Great Depression … Really?? Gary Wolfram

What he doesn’t discuss … unemployment during the Great Depression? What did solve unemployment during the Great Depression? What did return consumer confidence during the Great Depression? What actually did happen in the “REAL WORLD?” Gary Wolfram

Unemployment Rates, 1900’s According to Gary Wolfram … Did … 1920 – 5.2% 1928 – 4.2% 1930 – 8.7% 1932 – 23.6% 1933 – 25% 1934 – 21.7% 1936 – 17% 1938 – 19% 1940 – 14.6% 1942 – 4.7% 1944 – 1.2% 1946 – 3.9% According to Gary Wolfram … Increased international trade Fewer government regulations Lower corporate and personal income tax rates Did …