The New Deal-Recovery

The New Deal-Recovery Generate a list of at least three options for each of the three policy areas below. 1. Economic recovery: You need to get the economy growing again. Which potion will work out best? A. Balance the budget in order to reassure Americans about the government’s stability. With the economy as bad as it is, it would be irresponsible for the government to spend more money than it takes in. B. Increase government spending to start programs that will employ people and help businesses. If you keep taxes as the same rates, this will result in a government deficit but will cut unemployment. C. Cut taxes so businesses will have more money to invest and consumers will have more money to buy products. This will result in a government deficit unless you also cut spending. D. Build a large military (at this time, the U.S. military is small) in order to stimulate war-related industries and provide jobs for many of the unemployed. If you keep taxes at the same rates, this will result in a government deficit. E. Lower interest rates so that businesses can borrow money more cheaply, which will increase investments and encourage consumers to borrow more money and buy more products. Also, take the U.S. off the gold standard. This will allow you to print more currency (dollars), which will expand the money supply (about half the money supply is currency). F. Reform the stock market so that companies must reveal their true value. Investors must have accurate information. G. Increase taxes on the rich. Right now, manufacturers produce large amounts of goods; the rich are able to buy these goods, but the vast majority of the people are too poor. Increasing taxes on the rich will even things out, and demand will eventually catch up with supply.

Political actions: The U.S. is in an unprecedented crisis. People fear that civil unrest will break out. What political action will you take? A. Send the army to guard key points around the country, such as banks, bridges, government buildings, and schools. Your priority is to prevent violence, and the presence of the army will reassure people. B. Organize a private army under your command. Since the actual U.S. army is relatively small right now, you can build up a private army through the American Legion. These ex-soldiers have pledged to serve their country and would be willing to help out in this crisis. You could use the private army to keep order and make sure people obey laws. For instance, the army could watch over Hoovervilles to make sure these homeless people don’t start a revolution. C. Pass a law that temporarily gives all powers of the Congress to the president. You will then have the freedom to do whatever is necessary to get the economy moving and, if need be, to impose martial law. Presidents receive such powers during wartime, and the Depression poses as big a threat as any war. D. Use the relatively new technology of radio to give informal talks in which you inform American about what actions you plan to take, and reassure them that things will be getting better. These talks won’t sound like formal speeches: you will speak as if you are talking personally to each American listening. E. Halt all immigration. Without immigrants competing for jobs, more Americans will be able to find employment.

Industrial (non-farm) recovery: Industry represents a very important part of the economy. How can you use industry to bring about recovery? A. Have the government help businesses coordinate their production and sales in order to limit supply and boost prices. Businesses would be allowed to write codes to prevent unfair competition. In order to enable this, the government would exempt businesses from antitrust laws. B. Have the government manage the economy by setting prices and deciding how much to produce and when. If the government can establish a set of national goals (a “mission statement”) and get businesses to agree with these goals, that it can help bring about a unified commitment to economic recovery. C. Raise tariffs on imports. This will protect American businesses from unfair competition from foreign companies. As companies recover, they will employ more people, thus aiding the overall economic recovery. D. Provide government aid only to the most promising businesses. This will spur economic growth by rewarding the best companies. E. Help workers by passing a minimum wage and giving them the right to bargain collectively with owners. This will raise wages and increase demand for products.