L7: Great Depression

Many people believe that the Great Depression was a failure of the free market and was resolved by government intervention. I believe that this is a myth because government intervention is what caused the Great Depression and intervention only made it worse.
Herbert Hoover was president when we fell into the great depression. He is often viewed as the "hands-off" president that just let the market crash and refused to do anything about it. However, Hoover was very involved in the economy. He was a long-standing critic of free markets and small government. As soon as he was elected, his administration began expanding spending, taxes and regulation. He increased taxes on every bracket, taxes on the wealthy were increased from 25% to 63% and taxes on the poor were tripled. He initiated tariffs, known as protectionism, such as the Smoot-Hawley Act. His regulation in industrial, agriculture and labor fields combined with the intervention of the Fed caused the Great Depression.
Once the market crashed, government intervention only made things worse. Hoover significantly expanded the role of government in an effort to end the depression, but had no positive results. He doubled government spending during his term. What likely would have been a short but deep dip in the economy, turned into the great depression. FDR continued many of Hoover's policies and initiated the New Deal. These policies were ineffective and the economy continued to be in shambles until around the time of the onset of WW2. One belief is that WW2 brought us out of the Great Depression because so many people got jobs and it helped the economy recover.
Government intervention caused the Great Depression and government intervention worsened and extended it.

Blog Essay L6

If I were to create my own city in an uninhabited part of the globe where people would come to find opportunity, I would set up a free-market system. To do this, there would be certain key institutions that the government would have in place. I would have a constitution that outlines these institutions. The first is that all citizens must have the right to life. The second is that there must be personal and economic liberty. The last is that everyone must have a right to property. These institutions would be there to ensure economic growth and prosperity.

The first institution that will be in place is the right to life. This right precedes any economic prosperity. In the introduction to I, Pencil we learn that, “All of us can be left at liberty to choose and act as we think individually to be best, and our decisions will be spontaneously brought into harmony through the prices of the market.” As we are given freedom and the right to life, we make positive contributions to the economy. Without the right to life, it would be a tyrannical system that could not succeed economically. In places where this right is not respected, there is not economic prosperity. Additionally, as we discussed in class, statistics show, when more freedoms are given, the economy is more successful. The right to life is the first basic institution for a prosperous economy.

Second, there must be personal liberty and free choice as well as economic liberty. As Ezra Taft Benson says in “This Nation Shall Endure,” “Nothing is more to be prized, nor more sacred, than man's free choice. Free choice is the essence of free enterprise. It recognizes that the common man will make choices in his own self-interest.” The concept of people acting in their own self-interest is key for economic success. When buyers and sellers act in their own self-interest it is good for everyone. Sellers produce what buyers want, and in turn buyers get what they want. The government also takes away liberty by requiring more and more of its citizens through taxation. In turn, the citizens have less to spend on medical care, education housing and food and must rely on the government to cover such things. According to Ezra Taft Benson, “When that happens, liberty is gone.” This would hinder economic growth. There must not be many limits on business also because that slows down economic growth. For example, when the government tries to regulate an industry, they eliminate competition and there is no incentive to improve the goods or services provided. There is no need for the government to try to manage the economy. As described in I, Pencil by Leanord E. Read, there is no mastermind in the creation of many products. In fact it would be near impossible to try to control all aspects of making a product as simple as a pencil. Rather the invisible hand of economics works it all out. Therefore growth is hindered as the government takes away economic liberty.

Finally, it is absolutely essential for economic growth to have the right to property. Without the right to property, President Benson says there would be, “no incentive to enter individual enterprise, to risk one's own capital, because the fruits of one's labor could not be enjoyed.” The right to property is the ultimate incentive for economic growth and prosperity. It gives people something to strive for in order to improve their circumstances. On the opposite end of the spectrum, “Socialism, reduced to its simplest legal and practical expression, means the complete discarding of the institution of private property by transforming it into public property and the division of the resultant income equally and indiscriminately among the entire population." (Encyclopedia Britannica, 1946 ed., Vol. 20, p. 895.)

This system would not be conducive to economic growth in the least because it eliminates all incentive to better one’s situation. When property rights are fully given it is a cycle that is beneficial to all. As President Benson states in the reading, “Profit creates wealth; wealth creates more work opportunity; and more work opportunity creates greater wealth.”

If I wanted to make a city with economic opportunity and success, it would be a free market system. Its tenets would be the rights to life, liberty and property. This would ensure a competitive and healthy economic system as opposed to an unhealthy, government planned economy.

Blog Essay L4

In Federalist 51, James Madison wrote with the intent of explaining how the government would be kept in check. In the fourth paragraph, Madison state, "In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself."

In other words, the difficulty that he presents is that you must allow the government enough power to govern, but also make sure that they do not abuse that power. What Madison calls the "primary control" on government is a dependence on the people. The constitution allows for this dependence on the people by setting up a nation where citizens can vote on laws and elect leaders.

He also mentions "auxiliary precautions" which further prevent the government from gaining too much power. These precautions refer to the checks and balances set forth in the constitution. In the third paragraph of Federalist 51, Madison makes the point that without the three branches remaining separate, we would face a tyrannical government. Therefore, the constitution helps the government control itself because of the three branches of government.

To recap, primary control is that the government is dependent on the people. Auxiliary control is the three separate branches of government that check and balance one another.

Inspiration Behind the US Constitution

The US Constitution was a divinely inspired document. The fact that it has survived as the backbone of this country for so long is evidence that it was an inspired document.In Elder Oaks 1992 talk, The Divinely Inspired Constitution, he mentions specific principles in the constitution that were inspired. His disclaimer, however, is that he would not defend every line of the Constitution as scripture; giving the examples of voting age and the compromise on slavery.

 The first inspired principle he mentions is the separation of power. He explains that the idea of separation of power was around before the Constitution, but the way they adapted it to the US Government was inspired. The second example he gives was the Bill of Rights. This protection of the natural rights of citizens was inspired and a very important aspect of the Constitution. The division of powers between states and the federal government was something that was very difficult to agree upon. It was evidence of God's hand in the Constitution. Popular sovereignty was also an evidence of inspiration in the constitution. The final principle he mentioned was the rule of law and not of men. This principle makes it so nobody is above the law and it was inspired.

The backstory behind the creation of the Constitution is one of struggle and disagreement. First, the fact that a constitution was ever developed among such opinionated individuals is evidence that it was inspired. The reasons that the Constitution was inspired revolved around the diligence of the founding fathers. The founding fathers were good men who had the interest of the people in mind and wanted the best, putting their faith in God. Also, they studied what previous philosophers had said- John Locke's ideas of natural rights for example. This study opened their minds to the inspiration of the spirit for the application of good philosophies. They also studied other governments and learned from the mistakes and what was done right. For example, the delegates, for the most part, did not want a monarchy because  they had seen how wrong that system could go. Studying other governments also allowed their minds to be enlightened. In the scriptures, we are taught to counsel together in order to receive revelation. The founding fathers did just that during the Constitutional Convention. As they counseled together, they were able to receive revelation.

The Moral Foundation for the American Struggle for Independence

            Although the Revolutionary War era technically began in 1773, the moral reasoning for independence began in the 1600’s with Enlightenment. John Locke argued that all humans are born with natural rights, which include life, liberty and property. According to Jean Jacques Rousseau the Social Contract means that citizens have the right to overthrow a tyrannical government. In other words, if a government violated its citizen’s natural rights, then they had the right to revolt against it. The Enlightenment led to the American Enlightenment, which centered on many of the same ideas. The American Enlightenment also set the stage for an American Revolution. Therefore, when it was apparent that the British Government had become tyrannical, due to repeated abuses of the colonist’s natural rights, the colonies felt it appropriate to sever it’s ties with the British in whatever way necessary.

            The British Government violated the American’s natural right to property in many ways. One way they did this was imposing taxes on the colonists without their representation. This is a violation of property because they had not agreed to give up their property for the common good. Whether they would have agreed or not agreed is irrelevant. According to the natural rights, you cannot take away another person’s property without their consent. Clearly taxation without representation is a violation of this right. As the Declaration of Independence states in its list of reasons for severing ties with the British Empire: “For imposing Taxes on us without our Consent.” In 1775 the Sugar and Currency taxes were imposed upon the colonists. In the following year, parliament enacted the Quartering and Stamp Acts. The quartering Act can be interpreted as a violation of the right to property because if you are forced to house people against your will, is your house really your property? This was listed as a reason for independence in the declaration, “For quartering large bodies of armed troops among us.” The Stamp Act was a big deal because it was the first real direct tax that the colonists faced. This required official documents, newspapers, and other paper goods to have the stamps. This Act faced opposition from people in all 13 colonies, as well as a secret group that was formed called the Sons of Liberty. They threatened anyone who would sell the stamps. As a result of these efforts, no one sold the stamps and no one could buy them. Even still, most colonists still considered themselves loyal subjects of the king.

            Another way the British Government violated the American’s natural rights was through the practice of mercantilism. They required all trade to be done within the British Empire. They attempted to block the colonies from trading with the world. Most notably, it blocked trade with the French Empire, the Dutch Empire, and the Spanish Empire. It resulted in causing difficulty for the colonies in their trading endeavors. As the list of grievances from the Declaration of Independence states, “For cutting off our Trade with all parts of the world.” This mercantilism was a violation of natural rights because it restricted their liberty and in a sense, their right to property. This was not well received by the colonies and it further increased the tensions between the colonies and the British Government.

            The Intolerable Acts were further violations against the natural rights of the colonists. The Intolerable Acts, also known as the Coercive Acts were imposed as a result of the Boston Tea Party. The Boston Tea Party was in opposition to the harsh Tea Act imposed by parliament upon the colonists. A group of colonist men disguised as Mohawk Indians went to the harbor and dumped out Tea from the East India Company. They dumped approximately 90,000 lbs. of tea. costing at least ₤10000. Four parts of the Coercive Acts were in response to the Boston Tea Party and one was unrelated. The first was the Boston Port Act. It shut down the Boston Harbor until Boston had paid back the debt to the East India Company. This was unfair because they were punishing everyone for something that only a small group of people did. The second act was called the Massachusetts Government Act. It brought the government of Massachusetts under the control of the British Crown. Most of the positions in government were to be appointed by the king and town meetings were limited to once every year. This was a big step in pushing the colonies toward revolution because it showed the tyranny of the British Government. Next was the Administration of Justice Act. This act was created under the rouse of giving fair trials to British officials by allowing them to travel elsewhere to be tried. What this really did was give officials a free pass to do what they wanted to colonists because the witnesses would not be able to leave their work and travel long distances to testify against them. George Washington referred to this as the “Murder Act.” The next was the Quartering Act- the least oppressive of all the Coercive Acts. It allowed soldiers to take residence in uninhabited buildings in all colonies. The final of the Intolerable Acts was the Quebec Act, which was not related to the events in Boston but was seen as a way to punish the colonists.

            Before the war broke out, the colonists made one last effort to communicate peacefully and reasonably with the King. They adopted the Olive Branch Petition that affirmed their loyalty to Britain. However, the king rejected it and the colonists had no choice but to call upon their militias and fight back as best as they could.

            In conclusion, the reasons behind the American Revolution and the Declaration of Independence were reasons of morality and the prevention of injustice. The main reason behind the revolution was the King’s disregard for the colonist’s natural rights. According to John Locke those rights are Life, Liberty, and Property. In taxing the colonists without representation in parliament of any kind, they were stripping the Americans of their right to property. In spite of their attempts to communicate with the King, the colonists still received many unfair taxes. The colonists used did what they could to avoid conflict but Britain rejected that option and chose to fight a bloody war.