Download Class 22 - American Heritage

Progressivism: Conclusion
Response to early 20th century
problems from many angles
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Populism
Socialism
Progressivism
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Muckrakers
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Upton Sinclair (The Jungle)
Jacob Riis (How the Other Half Lives)
Lincoln Steffens (The Shame of the Cities)
Ida M. Tarbell (The History of the Standard Oil Company)
Muckrakers
 crusading
journalists
 exposed scandal, corruption, and injustice
 wrote in cheap and popular magazines
 light destroys corruption
 Ida Tarbell & John Rockefeller
 tradition continues today
Triangle Shirtwaist
Ida Tarbell on John D. Rockefeller
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Mr. Rockefeller was "good." There was no more
faithful Baptist in Cleveland than he. Every
enterprise of that church he had supported
liberally from his youth. He gave to its poor. He
visited its sick. He wept for its suffering... Yet he
was willing to strain every nerve to obtain for
himself special and illegal privileges from the
railroads which were bound to ruin every man in
the oil business not sharing them with him.
It may be that Mr. Rockefeller is one of those
double natures that puzzle the psychologist. A
man whose soul is built like a ship in air-tight
compartments to use the familiar figure -- one
devoted to business, one to religion and charity,
one to simple living and one to nobody knows
what. But between these compartments there are
no doors.
Progressive Reform 1880-1920
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Dehumanization
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Imperfect Information
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labor unions/regulation of working conditions
FDA
Monopolies
Break them up: Sherman Anti-trust Act
 Regulate them: FTC
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Continued
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Externalities
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Subsidize positive
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Reduce negative
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Prohibition (18th amendment)
Public goods
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National parks—environmental concerns
Public sanitation services
Economic Injustice
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Minimum safety standards in housing
16th Amendment—graduated income tax
Massive expansion of private charity
Underlying philosophy
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Human nature basically good
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Trust and empower the people
“Scientific” knowledge will provide “progress”
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Trust and empower experts
Blows to Progressivism
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WWI—1914-18
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Science
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People
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produced machine gun/mustard gas, but not knowledge to avoid war
Proved human—as in the human predicament
Jazz Age: “Roaring 20’s”
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Post war prosperity—Henry Ford
Harding, Coolidge, Hoover
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“a chicken in every pot and a car in every garage”
“We in America today are nearer to the final triumph over poverty
than every before in the history of any land.”
-- Herbert Hoover, 1928
Outline: The Great Depression
Economic Fluctuations and Recession
 Crash, Recession, and Depression
 Government Attempts To End the
Depression
 The Constitution and the Growth of
Government
 The Legacy of the Great Depression
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Macro-economic Instability
Normally output and employment rise and fall
cyclically.
Recession: The Breakdown
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Economies generally grow.
At times, though, they shrink: recessions.
Employment drops; output drops significantly below
what economy could produce with full employment.
Recession vs. Depression
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A depression is a very severe recession.
One definition of a depression: A drop of GDP
of at least 10%.
Great Depression begins as
Economic Crisis
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Recession begins summer of 1929
Oct. 24, 1929: Stock market crashes
By election of 1932
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25% unemployment in America
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50% Cleveland, 60% in Akron, 80% in Toledo
185,000 bankruptcies (large and small)
 over 4000 banks went bankrupt
 one-third of American farmers lost farms
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Recession: The Breakdown
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Why?
“Shock” hits the economy: stock market drop, bank
panic, crop failure, housing bubble burst.
 Wages, prices should adjust downward quickly to
preserve full employment.
 But wages, prices do not move down quickly:
contracts, inertia.
 Excess supply of goods and labor.
 Firms cut production and lay off workers: recession.
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Crash, Recession, and Depression
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Series of unfortunate events.
Boom economy in 20s.
 1929: Problems begin to emerge.
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Drought.
 Decline in industrial production.
 Stock market crash: October 24,28,29.
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1930: Problem shifts from stock market to banks.
Stock market losses raise concerns about banks.
 Runs. Bank failures. Devastating.
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Recap: Causes of the Great Depression
The stock market bubble bursts.
 Then trouble spreads to the banks.
 The Federal Reserve does nothing to
stabilize banks or to keep money supply
from shrinking.
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Crash, Recession, and Depression
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Series of unfortunate events.
1930-1933: 1/3 decline in money supply.
 Consumers stop buying; businesses stop investing.
 The Federal Reserve did not maintain the money
supply and did not rescue banks.
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Terrible mistakes: These two failures are the main reasons
why the recession morphed into a Great Depression.
Large tariff increases in 1930 (infamous SmootHawley tariffs).
Crash, Recession, and Depression
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Hard times.
The Great Depression shows how bad things can get
in a market economy
 1930-1933: 30% drop in GDP.
 Industrial production plummets.
 Farm prices plummet. One third of American
farmers lose land.
 Over 9000 banks shut down.
 Terrible dust storms make things worse.
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Great Depression Stats
Year
Real GDP Price level
$ billions 1958=100
Unemployment
Suicide
Rate
Foreclosures
1929
1930
1931
1932
1933
203.6
183.5
169.3
144.2
141.5
3.2%
8.7
15.9
23.6
24.9
13.9
15.6
16.8
17.4
15.9
134,900
150,000
193,800
248,700
252,400
50.6
49.3
44.8
40.2
39.3
Crash, Recession, and Depression
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Hard times.
 Many
men on streets.
 Many hide in houses until they get foreclosed.
 Many men leave families.
 Blacks hit especially hard.
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Great Depression damaged an entire
generation, some beyond repair.
Great Depression as Economic
Crisis
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Recession begins summer of 1929
Oct. 24, 1929: Stock market crashes
By election of 1932
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25% unemployment in America
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50% Cleveland, 60% in Akron, 80% in Toledo
185,000 bankruptcies (large and small)
 over 4000 banks went bankrupt
 one-third of American farmers lost farms
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Great Depression as Moral Crisis
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Individual demoralization
Social deception
 Alcoholism
 Abandonment
 Suicide
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National demoralization
Great Depression as Political
Crisis
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Violent conflict
Loss of faith in the system
Rise of demagogues:
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Manipulates emotions, fears, and prejudices to
obtain vast power
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America: Huey Long
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confiscate incomes over $1 mil.
$2000 guaranteed income/free college
“SOW” clubs boast 7 million members
Europe: Hitler, Mussolini, Stalin
FDR to the Rescue
 optimistic
&
energetic
 president as
legislative leader
 unprecedented
federal
involvement
Election of 1932
The Great Depression
31
FDR’s Approach
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Charismatic Leadership
A “New Deal”
“Bold, persistent experimentation”
 Anticipated and then influenced by Keynsian
economics
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“prime the pump”
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Stimulate demand by increasing spending or cutting taxes
FDR (continued)
 Revolutionized
 Four
 of
government
Freedoms Speech, Jan. 6, 1941
Speech
 of Worship
 from Want
 from Fear
Year
1928
1930
1932
1934
1936
House of Representatives
Senate
Democrats
Republicans
Democrats
Republicans
167
220
310
319
331
267
214
117
103
89
39
47
60
69
76
56
48
35
25
16
Government Efforts To End the
Depression
Election of 1932
 The New Deal
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 The
National Recovery Administration
 Agricultural Adjustment Act
 Short-term relief: CCC, WPA, others
 Regulation: SEC, FDIC, NLRB, FCC,
minimum wage, Social Security
 Keynesian economics.
Two New Deal Programs
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The Agricultural Adjustment Act (AAA) is
designed to help farmers.
 It
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does not work very well.
The Works Progress Administration
(WPA) does provide jobs for many.
Long-term Structural Changes
Caused by the New Deal
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Agricultural Price Supports
Government regulation of business
 SEC
to regulate the stock market
 FDIC to regulate bank deposits
 NLRB to regulate labor relations
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Social Security to provide retirement
income for the elderly
Acceptance of deficit spending
Government Efforts To End the
Depression
The Real Solution: Restore money supply.
 This plus passage of time, rather than just
World War II, end the Great Depression.
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The Constitution and the Growth of
Government
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Proponents of government growth argued
against the Constitution.
In practice, the Constitution did not prevent
government growth.
Commerce clause interpreted broadly.
 Takings clause interpreted narrowly.
 Free speech, freedom of religion, and due process:
not economic freedom.
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The Legacy of the Great Depression
Before the Great Depression, the
government did not take responsibility for
the economy.
 Default switched from no intervention to
intervention.
 WWII solidified this mindset.
 Since then, almost any glitch has been
subject to government action.
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The Legacy of the Great Depression
Most important legacy of Great
Depression is philosophical: We expect the
government to solve economic problems.
 The days of limited government are over.
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A spiritual-political dilemma
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God would have us be both free and equal
America’s response
Why Focus on Income?
lifespan education
leisure income
consumption
Equal
1800
lifespan leisure education consumption
Equal
2010
Unequal
income
Unequal
The Gospel and Economic
Inequality
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The Savior, through scriptures and church leaders, has
repeatedly told us to help the poor.
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“And now, for the sake of…retaining a remission of your sins
from day to day, that ye may walk guiltless before God—I
would that ye should impart of your substance to the poor,
every man according to that which he hath, such as feeding the
hungry, clothing the naked, visiting the sick and administering
to their relief, both spiritually and temporally, according to
their wants.” Mosiah 4:26.
Helping the poor is part of the public virtue we need to
sustain society.
The Gospel and Economic
Inequality
Does the admonition of Christ to help the
poor extend to the way we use
government?
 In other words, is using government to
compel spending on aid to the poor a way
to fulfill the command in Mosiah 4:26?
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