In this article, Reynolds discusses why the Works Progress Administration (WPA) was not as helpful as many people are lead to believe. In reality, government agencies like the WPA cause taxes to increase which ultimately interferes with employment and productivity. From 1935-1938 the WPA did not even manage to decrease the unemployment rate by one percent.
The Great Depression: An Introduction
Though already in a recession by the 1929 stock market crash, that event generally marks the beginning of the United States economy's collapse into the Great Depression, an unprecedented period of high unemployment, low productivity, bankruptcy, farm foreclosures, bank failures, and homelessness. By 1933 the value of all goods and services produced in the U.S. was only 60 percent of 1929 values, the value of stocks on the New York Stock Exchange was less than a fifth of its 1929 value, and the unemployment rate had risen to almost 25 percent. While the numbers are startling, they hardly convey the depth of hardship experienced by the average family.
The period of the Great Depression is one of the most analyzed epochs in American history, which is unsurprising since much of the federal government's current role was put in place during that period. Despite decades of historical and economic analysis, there remains little consensus over the cause of the Depression. Historian Paul Johnson calls the period "mysterious." Even ideologues, progressive or free market, disagree amongst themselves. However, while disagreeing on the specifics, the progressives generally agree the root cause was unregulated capitalism and the free marketers generally agree the root cause was the Federal Reserve's mismanagement of the money supply, the over-expansion of credit, and the regulations, such as wage and price controls, enacted by Presidents Hoover and Roosevelt. Beyond left and right, there are a number of other less ideologically committed theories, and most economists, regardless of ideology, agree the Depression was a complex event caused by some combination of these theories.
If there is one thing scholars agree on, it is that the Great Depression caused a dramatic change in the role and perception of government in America. Through the course of a decade, government quickly shifted from a laissez-faire, hands-off role in the economy to a highly regulated, hands-on role. New Deal programs gave birth to the welfare state, making the federal government much more responsible than ever before for the well-being of the people. Whether this change was good or bad is at the heart of the debate over the Great Depression.
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