Our social sciences lesson has been interesting in my opinion. Today, Paqui has explained us the reactions of the "Great Depression". First of all, she has written something on the blackboard, and after we have copied it, she has explained us that president Hoover didn't do so much to end with the Depression. His administration, which lasted 3 years (1929-1932), started without any intervention of the State in economy. At the beginning nothing was done following economic liberalism orthodoxy. Later, a deflationist policy and protectionism started. People continued keeping low prices in order to recover consumption and the US increased tariffs. As a result of these things, the "Great Depression" became more serious. Not only didn't president Hoover do anything, but he damaged more the situation.
After that, elections were called and F.D, Roosevelt won them and launched an economic program based on John Maynard Keynes ideas. This was called the NEW DEAL.
John Maynard Keynes (British economist)
Some of Keynes solutions were that the State had to intervene in economy and increase public expenses, investment in public works and stimulation of production and consumption and reduction of stocks.
Roosevelt's government launched emergency laws to reactivate economy: relief decisions, economic legislation and social legislation. All these decisions were known as the "three R program: Reform, Relief, Recovery".
After explaining that, Paqui has told us to complete the decisions of all these, which were:
- Subsidies for farmers to destroy their stocks and recover prices.
- Minimum prices, in order to fight deflation.
- Creation of the Public Works Administration, to build bif infrasturctures with public money and create job.
- Social security Act: pensions for retired workers, orphans and disabled. Here Paqui has told us one curiosity. After WW2, the State kept women working in factories and offered money to study to those veterans who came back from war, only if they wanted to. This was a way of preventing unemployment, because many war veterans were coming back and this could create a new crisis.
- National Labour Relations Act.
- National minimum salary.
- Child labour was abolished.
- Banking reform, in order to avoid another bankrupt and government help in exchange for cheap credits to recover investment.
- Creation of the SEC, to supervise the Stock Exchange Market and protect investors. Paqui has told us that in the 2008 crisis as there wasn't credit, the SEC recommended the government to help the banks with $700.000 millions to recover, and when they recovered they gave the money back to the government.
These decisions reduced unemployment and production recovered. The results were positive, although the Supreme Court of Justice declared some of the NEW DEAL decisions unconstitutional. The court argued that the Federal Government had imposed these decisions over the states.
To sum up, some of the new words we have copied in our glossary:
- New Deal: nuevo trato, nuevo Reparto.
- To deepen: profundizar.
- Relief: alivio.
- To hamper: obstaculizar.
- Public expenditure: gasto público.