The of labor unions and ethnic minorities. This

The Modern United States has
experienced and observed an array of economic highs and lows throughout its
history. Notable lows include the Great Depression that occurred during the
1930’s and the Great Recession that occurred in 2008. It is very interesting to
study the many parallels between the two, as many political leaders and
economists have in order to gain further insight to the causation and effects
of these two significant moments in American History.

            Chronologically, the New Deal is
defined as a series of federal programs, financial reforms, and regulations
enacted by the United States government during the 1930s in response to the
Great Depression. The Great Depression was a period of low business activity
which began with the stock-market crash in October, 1929, and continuing well
into the1930s (Schaller 791). Some of these federal programs included the CCC,
the CWA, the FSA, the NIRA, and the SSA. Another prominent component of the New
Deal was that it established restrictions and provided safeguards for the
banking industry and vastly altered the monetary system. Most of the programs
established were derived from laws passed by congress or presidential executive
order during Franklin D. Roosevelt’s first term. Schaller and many other
historians describe the primary focus of the New Deal as the “3 R’s”: relief
for the unemployed and poor, recovery of the economy, and reform of the financial
system in order to prevent another catastrophic depression (Schaller 793-816).  

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The New Deal’s effects were felt
nationwide and on a variety of platforms. Politically, realignment was
initiated, making the Democratic party establish a foundation in liberal
ideals, and empowerment of labor unions and ethnic minorities. This basis has
continued throughout the modern political climate. In contrast, the Republicans
were completely against the New Deal and perceived it as an enemy of business
and growth. The “First New Deal” is arguably more successful than the “Second
New Deal” (Schaller 802). The former focused on the monetary system and banking
crisis by enacting the Emergency Banking Act in 1933 and the Federal Emergency
Relief Administration provided over 500 million dollars to relief operations at
the state and local level. The Securities Act was also enacted in 1933 to
prevent another detrimental stock market crash. The “Second New Deal” included
the Wagner Act of 1935 which involved protection of labor organizing, the Works
Progress Administration relief program, the Social Security Act, and other various
programs that provided aid to tenant farmers and migrant workers (Schaller
805). One of the most significant aspects of the “Second New Deal was the Fair
Labor and Standards Act 0f 1938, which set maximum hours and minimum wages for
most categories of workers. These standards are relatively unchanged today. The
largest and most prominent programs that are still in existence today stemming
from the “Second New Deal” are the Social Security System and the Securities
and Exchange Commission.

Interestingly the New Deal’s
banking regulation lasted until it was suspended in the 1990’s which some
economists believe was a fatal mistake that inevitably led to the Great
Recession. Arguably, the causation of both national crisis lie at the hands of
the federal government; however U.S. History invariably reveals its citizens to
turn to, or rely on the federal government to create some form of reparation in
times of need. The Great Recession primarily involved the financial crisis of
the 2000s-2010s and the U.S. mortgage crisis of 2008. From an international
perspective, this recession was not felt evenly in global markets. Most of the
world’s developed economies, such as those in Europe, suffered greatly; while,
many newer developing economies such as India and China saw substantial growth
during this time period.. A large portion of U.S. mortgaged-backed securities
were supported by subprime mortgages. Regrettably, the U.S. housing bubble
burst in 2008, due to the negligence of homeowners who began to default on
their mortgage payments. As a result, over inflated asset prices and risky
loans within the market were exposed. Similar to the Great Depression,
countless banks suffered huge losses, which required massive public financial assistance.
The government’s response, as it was during the 1930s, was to establish
policies that stimulated the economy and reduced financial system risks. For
example, President Obama, followed FDR’s lead and began targeting spending within
interest groups. Under executive order, Congress signed into law the American
Recovery and Reinvestment Act of 2008, which sent tax dollars to cities and
voting groups across the country. The ARRA was undoubtedly fundamental in ending
the Great Recession. Unfortunately, the most controversial effect of the policy
implementations of FDR and Obama during two of the greatest economic tragedies
in U.S. History was the significant increase in national debt during each of
their terms in office.

 Numerous Americans, economists, and
politicians criticize the cause and subsequent effects of the Great Recession
by trying to lay blame on one sector or the other. Samuelson offers a blunt
perspective by stating, “In a more honest telling of the story, avaricious Wall
Street types, fumbling government regulators, and clueless economists become
supporting players in a larger tragedy that is not mainly of their making. If
you ask who did make it, the most honest answer is: We all did.” Moreover he deems
that the cause of the great recession lies within America’s “widely shared
quest for ever improving prosperity contributed to the conditions that led to
the financial and economic collapse.” This notion has been a transcendent
element seen throughout U.S. History. Arguably, this ideal is the essential
parallel, encompassing the true cause, which links the Great Recession to the
Great Depression.

Despite the various changes seen
throughout American History, the U.S. government is consistently available to
its citizens in times of strife. As a result Americans are accustomed to
relying on their government to provide aid. The government’s interventions are
known to have positive effects and negative effects on the U.S. economy,
political climate, and work force. As a nation there is no one entity, being,
or source that can be blamed for the two greatest economic tragedies in modern
U.S. History. Developing a deeper understanding to the complex aspects of the
past is vital and allows individuals to make greater strides, in terms of
progress, as they advance into the future.


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