What Happened America?

American Economics in the Early 1900's

America is looked at as a substantial economic super power. This title was really earned back in the late 1800's to the early 1900's. It was mainly caused by the industrial revolution which brought mass production and global economic expansion.After WWI,it seemed the height of the industrial revolution was met by devastating natural and man made disasters.The great dust bowl,for example, was a direct effect of the over production in the agricultural aspect of the economy.This caused a small depression due to the falling food prices(which was stemmed in the overproduction of crops and a decreasing demand for them),which in turn caused farmers to have to default on their loans,and therefore causing the bank to foreclose their farms.This shook the entire the economy.The debt crisis started to crumble and weaken the economy because investors were losing money,in turn,causing them to not be able to pay back the loans given to them to buy the stock they owned,and stock began to plummet.Finally,the economy fell apart.Unemployment grew and people began to lose everything.This whole event set up a major platform for where America is today,economically.

Franklin Roosevelt's "New Deal"

The economic distress was unbearable for the American people and one man proposed not a solution,but an economic painkiller to this problem,the "New Deal".This may have helped the spirits and hopes of the people,but the legislation has elements of socialism and doesn't appear to be sustainable,except through high taxation.The problem is,America's taxes have been reduced several times since this legislation,and dependency on these various social programs have increased.When there is an exponential relationship between the income the government revives(which is decreasing) and the demand for the programs(which is increasing) there is a deficit.

Projected Trend of Spending-Government Revenue

The projected government spending to revenue through tax.
The projected government spending to revenue through tax. | Source

So Then What Happened America?

After the Great Depression,the new deal was changed a few times and some of the legislation were taken out.However,the main problem of the new deal was the idea that the government was there to provide to people,and with this a false sense of dependability,as well as a breed of socialistic people who believe that it is the government's job to provide for them.This doesn't mean that the programs that help people are bad,but they should ONLY be a last resort.The reason it should be only a last resort is simple;it wasn't built to support more than a small percent of people!However,another huge part of the problem with America's economy is the defense spending.

U.S. Defense Spending
U.S. Defense Spending | Source

Military Defense Spending

This is one of the most influential reason for the American debt crisis.The military budget in the last ten years has been exponentially growing,thus putting a burden on the already stressed deficit.With taxes being decreased and bubbles (.com,housing,etc.) rising and popping,not to mention inflation,a growing defense budget,as well as a growing social welfare dependency,it is no wonder America is functioning off a deficit!The worse part about it is people don't want to pay the taxes needed to have everything they do,the economic security that the socialistic programs give.Instead,people just want to take and demand.

In Closing

The dollar is dropping at an alarming rate and people ask themselves,"how is it that a huge economic country such as America could fall?"In fact,many don't want to believe it,but it is real.Legislation like the new deal has tricked people into believing this reality of a nanny government that will take care of them when they face economic failure.This belief is dangerous and only sets up a huge,hard crash that is now, inevitable.America is living well past their means and the many parts of the world economy are feeling the stress.Many take for granted their economic security and because it is all they have known,they can't fathom what it would be like without it.It would do people well to become more economically independent and innovative for the security of themselves and their family.

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Comments 7 comments

JamesPoppell profile image

JamesPoppell 4 years ago

Excellent hub and in my opinion very accurate on "the new deal" and how that legislation tricked Americans into a false since of security. Very informative. Thanks.

American Romance profile image

American Romance 4 years ago from America

We are failing almost soley based on entitlements! Second we have a government that cannot stop spending! We need to slash government, cut out the IRS, fix social security and force the 50 million on welfare to get a job!..........there are jobs out there, I plan on writing a hub this weekend to prove it!

CHRIS57 profile image

CHRIS57 4 years ago from Northern Germany

What is most striking to me is that in analytics of economic development one major variable ist always missing: technological progress.

So if we go back to the pre WWII period then it is technological progress that propelled productivity and set free large numbers of workforce. In turn that caused a reduction of demand and consequently the crisis known as the great depression. The impact of WWII was to channel the gain in productivity to new horizons. The new deal itself only provided the money fuel.

For the situation of today and tomorrow. Lets make a little analogy excursion. Think of future entitlements to be the grain to feed you in times to come. That grain is stored in a big harvestore. In a circle around this harvestore guards are sitting to protect that harvestore (the military). As long as few people need the grain, it does not matter of how much grain is in the harvestore. So talk about gigantic entitlement sums are void. But there is another issue: What happens to the harvestore itself? It must be maintained, repaired,kept in shape. The harvestore is the asset of an economy. And here comes my concern. The economic assets are deteriorating. There is not enough effort invested into maintaining assets. So we don´t have to talk about what is in the harvestore if the harvestore itself is falling apart. And that is what is happening.

Look at the US debt clock http://www.usdebtclock.org/

the real interesting figure is "Total National Assets". That number is going down 3 to 4 times as fast as debt is rising. But assets are what is needed for the future. Of course the debt clock is a nice gadget of some economic model builders, but it holds some truth.

Thanks for your hub. You address what is worth thinking about.

American Romance profile image

American Romance 4 years ago from America

Chris, you have a lot of learning to do my friend,

technology has nothing to do with it! Even if we lost 10% of the jobs of old due to technology, they 20% more opened in new areas! (like Solyndra solar panels ha) Your comment wants power to the government, The new deal made us a nation of entitlement, not the independent nation we once were!

During the depression, men walked hundreds of miles, slept on the side of the road to gain employment, We now have 50 million people on food stamps! Now in my mind that means they are starving!! (do you believe they are starving) Anyway we have jobs in our company and not one application has been filed! We have lots of good paying jobs and NOT ONE APPLICATION!

CHRIS57 profile image

CHRIS57 4 years ago from Northern Germany

A.R.: Technology is something that improves productivity. Just think about how many people were working in agriculture in the 19th century, how many before WWII and how many now a days. If all people on food stamps today would be needed to work in producing food, there would be no unemployment. The difference is technology, combines, tractors, ... and really low wages.

The US was highly productive in the 40ties, 50ties and 60ties. With gradual decline from the 70ties on, today the US economy is less productive. We don´t have to talk about public debt or the more less silly attempts of the current administration to create supply side stimuli (like with solar energy). If you add public, corporate and household debt of the economy, then the sum is rising and rising (more than triple of GDP). But the really bad thing is that assets (the other side of the balance sheet) are declining. The difference between assets and debt is wealth, and that number is going down in the US. The economy, its industry simply isn´t producing enough new assets to replace the old. That is how productivity is linked to wealth and well being of an economy and its participants.

American Romance profile image

American Romance 4 years ago from America

C57, ..........on paper you are correct, But also remember that with higher numbers of actual people we need higher numbers of food, meaning more people to build those tractors and combines that replaced horses and mules! We have different needs and wants that require people that didn't require them 80 years ago! Those 50 million on welfare can find work,.......they choose not to! Either out of laziness, or the fact they THINK they deserve better! I make 6 figures on my job, and I sell plantation shutters and install them on the side, I buy old furniture and refinish it and sell it! Why? because I want more STUFF out of life! Too many have no creative ideas, most are lazy and have never aquired a work ethic from their parents! I have no desire to "store" up anything for them! I see welfare and food stamp abuse DAILY! I would guess that less than 5% of those 50 million truly need it or deserve it!.....I state again, my company has good jobs.................where are the takers?????

CHRIS57 profile image

CHRIS57 4 years ago from Northern Germany

A.R., i am aware my comments are on a very academic, macro level. But from my experience,which i had to gain the hard way, it pays off to understand the big picture.

I agree with you that things change and new demands come up. This is not the world of the early 20th century.

I would assume that your personal driver and incentive "i want more STUFF out of life!" is shared by most people, also shared by those 50 million unemployed. So we have to ask, why are those on welfare not picking up the carrot? There is a number of reasons.

1. The difference between welfare and money payed for jobs is too low.

2. There is no universal job training established (vocational training) for qualified, higher wage jobs.

3. Because the US runs low on productivity (again this word), 10% in US compared to 14% world average, there is too little real wealth to distribute. So all jobs in service related fields have to be low wage, there is no money to spare.

There is much more to it. All has do to with the general attitude in the US that there be either big government (Dems) or no government (Reps), but no one thinks of smart government.

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