New Deal

What are the 3 questions every economic system should answer?

• What to produce, How to produce, Who gets what is produced(determined by society’s values and economic goals)

Market Economy

• Economic decisions are made in the marketplace through interactions between buyers and sellers according to the law of supply and demand. This is a laissez-faire approach to the economy.

Command Economy

• Central government officials make all economic decisions for the people. 

Mixed Economy

• Some economic decisions are made by private business owners, others are dictated by government officials and their policies.

• Who owns property and means of production in capitalism

Products provided by individuals

• Who owns property and means of production in socialism

Products provided by the government

• Who owns property and means of production in communism

• products owned by the workers(collectively owned)

New Deal:

• Legislation and programs created by FDR to promote economic and social reforms during the Great Depression 

Long-term Legacy of New Deal

• It expanded the Federal Government's role in the economy 

How a liberal (Democrat) often tries to solve economic problems of poverty and unemployment

• : “Hands on”, Increase federal aid to poor by deficit spending(government borrows money to start projects like construction to get the economy rolling again, increase taxes on the wealthy.

How a conservative (Republican) tries to solve economic problems of poverty and unemployment

•  “Hands Off”(Laissez-Faire), stimulates the economy with tax breaks, balances the budget, reduces federal spending, and provides little to no federal aid to the poor.

How a radical (Communist) tries to solve economic problems of poverty and unemployment

•  “Choke Hold”, make all citizens equally wealthy, seize income from the rich and redistribute it, and government control of all businesses.

Herbert Hoover

Supported the conservative

Franklin D. Roosevelt

Supported the liberal

Huey long

Supported the radical

• Summarize “Keynesian” Economics

  • Which political party tends to embrace this?

• The liberal(democrats) support this. They use deficit spending to stimulate economic growth

• Summarize “Supply-Side” Economics

  • Which political party tends to embrace this?

• Conservative(republican/libertarian) support this. They cut taxes for business owners in hopes they reinvest and it “trickles down” in the form of new jobs.

Deficit Spending

• Government borrows money to start projects(construction, etc..) to get the economy rolling again.

3 Rs of the New Deal

• Relief and Recovery(FDR created temporary programs that created temporary jobs so people had money to purchase things) and Reform(these programs were long-lasting and designed to help prevent another economic collapse. Many of these programs and or agencies are still in existence today).

FDIC

• Federal Deposit Insurance Corp(helped investors): took action to protect bank depositors, purpose was to provide stability to the economy and the failing bank systems, this was a reform.

SEC

• Securities Exchange Commission( helped investors): Regulate the stock market and make it a safer place for investments. It limited margin buying and deceptive stock selling, this was a reform.

CCC

• Civilian Conservation Corps (helped unemployed): helped provide jobs to more than 2 million young men. They replanted forests, built trails, dug irrigation ditches, and fought forest fires. This was a Relief and Recovery.

WPA

• Works Progress Admin (helped unemployed): created to give people temporary jobs on public work projects. This also provided work for thousands of writers, artists, actors, public art, building schools, dams, tennis courts. This was a Relief and Recovery

NRA (not the gun group):

• National Recovery Admin (helped laborers): promoted economic recovery by regulating production, setting minimum wages, maximum hours, and even prices of some goods. This was a reform.

Social Security Act

• This helped elderly and unemployed. It set up a pension system for elderly people. Also workers 65 and older monthly stipends based on previous earnings. This gave the elderly small relief payments and this was a reform.

TVA

• Tennessee Valley Authority (helped unemployed): Devoted money to construction of hydroelectric dams that helped provide electricity for large portions of the south. This was a relief and recovery.

Definition of the dust bowl

• A severe environmental disaster that resulted in massive “black blizzard” dust storms 

Causes of the dust bowl

• over farming in the 1920s, extended drought

Results of the dust bowl

• massive migration of people to the pacific coast, worsened the Great Depression, because many farmers lost their income and land.