The Great Depression

 

The Great Depression was not caused by a failure of the free market. Also, the Great Depression was not resolved by government intervention. Government intervention only caused the Depression to linger longer than was necessary. The free market did not cause the Depression. The myth that free markets caused economic failure and government intervention was the cure is completely false. Unfortunately many people believe that the cure of the Depression was World War II and government intervention. These myths are false. If the free market went unhindered, the depression would not have been so devastating.     

          There are many reasons for the Great Depression. During the 20’s the nation was experiencing exponential growth in the economy and GDP. This enormous growth caused wide-spread speculation which helped cause the crash of stocks. Another great cause of the Depression was the emergence of the Federal Reserve (FED) which controls the flow of currency in the US. The FED created increased interest rates which slowed the market resulting in collapse. Banks fell at the beginning of the Great Depression because of heavy regulation on the state level. This heavy regulation and strict laws prevented financial securities in the banking systems. This created the bank crash which is a major part of the Great Depression. Speculation, government control such as the FED, and the natural ebb and flow of the market caused the initial crash of the Market.

          The United States stayed in a state of economic depression because of government intervention. If the president and congress had a laissez-faire role in the economy, the Depression would not have lasted nearly as long as it did. The government took many steps to try to fix the crashed economy. Governmental leaders had strong beliefs of John Maynard Keynes which says that government should help control and guide the economy. These beliefs are wrong and hurt the economy more than provide aid. We see examples of this by firstly, the Smoot Hawley Tariff which was meant to protect American businesses from foreign trading by raising tariffs on goods. This became a great hindrance to not only America, but the whole world. Secondly, Government tried to stimulate the economy by spending large amounts of money on useless programs. An example of this is the New Deal which was instituted by Franklin D. Roosevelt. The New Deal had many new programs and laws which were passed by congress and the President. Some important aspects of the New Deal are;  Works Progress Administration (WPA) which was a giant relief program which employed millions of unskilled workers to do public projects. This program wasted millions of governmental spending which could have been put to much better and necessary use. Also, the Wagner Act which limited employers and basically took away competition and much freedom necessary in the market. Thirdly, the National Industrial Recovery Act (NIRA) regulated industry and opened the door for monopolies in an attempt to aid the economy. The effect got rid of competition in industry. We also see the Agricultural Adjustment Act (AAA) which paid farmers to stop growing crops. It literally paid farmers to destroy their goods. To me, this seems like a large waste in order to jack up prices on food. The Fair Labor Standards Act set the minimum wage and set the maximum hours for workers. This caused many to lose their jobs and businesses to go out of business. Also many other programs of the New Deal greatly hindered the recovery of the economy. Government intervention was a very bad thing. The government should never have so much power over the economy and market.

       Economic down turns and market fluctuations are normal in a healthy economy. Before the Depression, there were crashes and downturns in the economy. However, these downturns ironed themselves out because the free market fixed itself. When the government stepped in, things only got worse and stayed worse. It is a false myth that the economy collapsed because of the free market and that government was the reason it was fixed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Lesson 6 Charter City Essay

If I were to establish a charter city, I would establish a setting of free markets, personal liberty, and continuous opportunity. The most important aspect for economic prosperity to prevail, is establishing a set of rules based off of the United States Constitution and the Declaration of Independence. This key institution would protect life, liberty, and property. Without protection of life, liberty, and property from government, there would be no economic prosperity. Also, things like the Commerce Clause and the Bill of Rights help protect freedom in the markets and trading so prosperity may emerge. With rules based off the US Constitution we would have the Rule of Law which gives sovereignty to the people. Government would not have the power to control people or the economy. All of these aspects are extremely vital to achieve a prosperous economy.

            The Second most important institution that I would create would be to establish a free market economy based on capitalism. Capitalism can only prosper where people’s property rights and other liberties are protected by government. Therefore, in order to have a capitalistic society the very first step is to establish rules that protect such things. It is important to have a free market because a free market promotes competition which is fueled by people’s self interest. Competition promotes economic activity and prosperity for the whole. Hence, it is important to be “greedy.” In “Greed” the video from class we learned how free markets allow people to pursue self-interests which helps build wealth, provides more jobs, and creates a better standard of living. When people follow their self-interests and are unhindered by tyrannical government we see the invisible hand. This invisible hand as it has been called is only present in a capitalistic society. In I-Pencil, the invisible hand controls millions of people who all come to create a pencil. No one person really knows all the complexities of how to make a pencil. No one person or group of people can control the economy. The invisible hand is very important. In pursuing one’s own interests, you help others pursue their interests as well.

            The third and extremely important institution I would create is the adoption of modern technology. I would promote new technology because technology is vital for a prosperous economy. Technology provides more work and improves efficiency of workers which builds wealth and creates more surplus. This is shown by Daniel Boone who made nails like his father. Daniel could make 50 nails per day. The lack of technology back then created a low standard of living. Today, nail factories can create millions of nails in a day which lowers the price of nails and creates a better standard of living. Also important is entrepreneurs. In Brother Johnson’s essay it clearly shows the importance of entrepreneurs. “In countries with entrepreneurs we see implementation of technology and wealth creation, whereas, in countries without entrepreneurs we see stagnation.” Technology and entrepreneurship create opportunity and wealth. In order to have a successful economy there needs to be moral based rules which protect individual life, liberty, and property. There needs to be capitalism which is propelled by self-interest and the invisible hand which use technology and entrepreneurship to create wealth. There needs to be freedom of trade and partnerships. People need to be protected from government and the market needs to be protected from governmental intervention. Only with these key aspects can there be true economic growth. I know that a city following these institutions would become very prosperous. 

Justin's Federalist 51 paradox

Madison’s Paradox

The paradox that James Madison proposed in Federalist 51 is that men are imperfect, and therefore government will also be imperfect. People can be bias. People tend to seek for self preservation instead of bettering the whole.  The question is how do we create a just and fair government and a more perfect union when no one is perfect? The answer to this paradox is in the Constitution. First of all, the power is derived from the people. Government is for the people, of the people, and by the people. James Madison went on to describe auxiliary precautions to provide a just form of government. The most important auxiliary precaution is the Constitution itself. It specifically limits government by giving each branch of government its enumerated powers. This limits the government from becoming tyrannical.

           The second auxiliary precaution is the division of powers. This means that we have two different governments that control each other. We have a national government which is separate from state governments. There are specific rights in the Constitution only given to the national government and things like the 10^th Amendment which only gives powers to the States.  This separation of powers creates a check and balance between the national and state governments. Another form of checks and balances which helps provide a more perfect union is the separation of powers. This is different than the dual security of federalism. The auxiliary precaution of separation of powers is dividing governing power into three different and distinct branches. The Legislative branch in both National and State government is further divided into two distinct houses; the Senate and the House of Representatives. The House consists of officials who represent the people based on the population of an area. The Senate represents each state fairly. The Legislative needed to be further divided because it has a very crucial job of creating laws. There is also the Executive branch of government which enforces and executes the laws created by the legislature. Furthermore, we have the judicial branch which interprets the laws. The separation of these powers makes it so that no one branch of government has more power than the others. The three separate entities create a system of checks and balances which are clearly outlined The U.S. Constitution. In Federalist 51, Madison explained the importance of separating powers. “The separate and distinct exercise of the different powers of government, which to a certain extent is admitted on all hands to be essential to the preservation of liberty…” We could not have liberty without separate powers.

          Another auxiliary precaution that Madison described through the Federalist Papers is that the people have sovereignty. We can exercise this sovereignty by using the 15^th Amendment of the Constitution. We have the right to vote for our governmental candidates. However, some officials are elected indirectly or are appointed. For example, citizens vote for the candidate who will best represent the citizens in the lower house every two years. In the upper house, senators are elected by state legislators every six years. The president of the Executive branch is elected by the Electoral College. The president appoints members to his cabinet, and he appoints members of the Judicial branch. This system of voting and electing is a very important auxiliary precaution. Elections are at different times, and different officials serve different terms in office. This all comes together to assure just decisions are made and that people become fairly represented. This republic form of government insures checks and a balance of government which Madison described in the Federalist papers.

          In Federalist 10, it describes the dangers of factions. With our continental sized republic, there will always be a difference of opinions and factions. This great amount of diversity is a form of auxiliary precaution which protects from one group becoming too powerful. Also the Constitution provides security for the minorities through the Bill of Rights and through other articles in the Constitution.

 

          Federalist 51 closely relates to our constitutional system. It eloquently describes how the separation of powers is vital for liberty and how division of government needs to be present for government to operate correctly. “Hence a double security arises to the rights of the people. The different governments will control each other, at the same time that each will be controlled by itself.” People need to be checked and have limits and rules because no one is perfect. Federalist 51 describes the importance of separate departments working independently. The U.S. Constitution has many of the aspects and ideas that are described in Federalist 51. The Constitution solves the problem stated by Madison in the structure of our Republic government and in the above mentioned information.Without such, we would not have liberty. 

Divine Constitution

The Inspired Constitution

There are many aspects of the U.S. Constitution that were inspired of God through man. The fact that we have the constitution still this day, and that it is the oldest surviving constitution proves that it is an inspired document. The fact that almost every nation has formed a constitution based off the one our founding fathers created through the hand of God is evidence that it was inspired of God. The specific components of the Constitution that were divinely inspired are first the separation of powers. This was inspired because it was relatively new. The new nation was in turmoil and about to collapse. The delegates were extremely split on the issue of separation of powers. They eventual created the Connecticut  Compromise which was inspired because it provided the right balance between three branches of government. Namely, the executive, the judiciary, and the bicameral legislative branch. Congress, the first house of the legislative provides each state two representatives, and the house of representatives provides proportional representation based on population. With the separation of powers, tyrannical rule cannot exist. This perfect system of checks and balances in the government was truly inspired. The second inspired segment of the Constitution is the bill of rights. This was inspired because it provides freedom of religion. Without the first amendment, the gospel may not have come forth as it did. The bill of rights also guarantees freedom of speech, press, free assembly, free association and the right to bear arms. It limits the power government has over individuals and protects our natural rights. Our life, liberty, and property are protected through the Constitution. Our natural rights and the bill of rights were inspired aspects of the Constitution. Thirdly, the separation of powers was inspired from God. Along with the separation of national governmental powers, we also have through the constitution the separation of powers in a state level. Each state has three branches of government to form state-level checks and balances. As well we have the separation from state and federal government. The national government checks the states powers. This separation of government provides a way for people to be important to government. This manifestation of divided powers was inspired. Fourthly, the rule of law in the constitution was inspired. Our government is for the people, by the people, and of the people. We give consent to be governed. We are above government. Government is not above the people. This is extremely important in maintaining a righteous system of government. The rule of law, along with many other aspects were indeed inspired.

            Then arises the question: how was the Constitution inspired? It was inspired through men who God foreordained for the very purpose of creating a divine constitution.  In D&C 101 verse 80 it says “And for this purpose have I established the Constitution of this land, by the hand of wisemen whom I raised up unto this very purpose, and redeemed the land by the shedding of blood. God tells us that his purpose was to bring forth the true Gospel in a land of Freedom. The constitution was vital for the coming forth of our church. The founding fathers were able to receive revelation from God about the new form of government because they worked at it. They rigorously studied many forms of government. They prepared themselves through diligent learning. The founders discussed and debated many issues. They formed committees and counseled together and were able to come to an agreement because they knew the hand of God was in the work they were performing. These men were religious. God was very much in their lives. The founders prayed often, and were filled with the light of Christ. They were humble men of action. They acted on the promptings and feelings that they received. Through inspiration, the founding fathers constructed a divine document called the Constitution. It was truly a “miracle” as George Washington stated when he commented about the forming of the Constitution. The founding fathers were raised by the hand of God and guided by the same. Without these men and their efforts, we would not be the nation we are today. Thankfully however, we do have the inspired Constitution which bares God’s stamp of approval.