The Great Depression in the US - Essay Example

The great depression originated in the United States. This was because of the fall in stock prices starting in 1929. It eventually became worldwide news with the stock market crash of October of the same year. The great depression had major and devastating effects on both poor and rich countries. It affected the people’s income, profits, and tax revenue as prices dropped. As a result, international trade plunged by more than 50% leading to serious cases of unemployment in the US and other parts of the world (Miller, 683).

The great depression becomes relevant in modern America as it offers guidelines on what the country should not do. In that case, America uses the occurrence to regulate its performance in local and international markets. For instance, the great depression was caused by the over-investment in the capacity of the heavy industries compared to the earnings and wages of independent farms and businesses. As a result, the American government has learnt to regulate and manage the cash flow in the economy. In that regard, it pumps money into the pockets of the consumers to enhance their purchasing power. The country can maintain the industrial base and re-inflate prices and wages to ensure that all the economic bases are in check. Furthermore, the decline in output was also a cause of the great depression. In this case, the decline caused an initial decline in the output, and it prolonged the recovery due to ineffective policies that affected the labour market (Hamilton, 147-150). Based on this situation, America has been able to streamline its labour policies. Its labour policy guides the labour sector and protects production. The country has managed to address the declining capital stock, labour force and productivity that complement the use of these inputs.

The great depression is indeed a great time in American history. It influences the economic direction taken by the US. For a long time, the country has undertaken various steps to enhance its competitiveness and stability of the American economy. From the various causes of the condition, the American leadership and policymakers have been at the forefront to develop sustainable structures that would abate the repeat of the condition. Furthermore, the country has managed to streamline the foreign trade in the country. This is because the American economy largely depends on foreign trade. The retaliatory tariffs on other countries caused the country to reduce its international trade thus affecting the economy. With this know-how, American policymakers take into account the legislative and policy issues and concerns that hinder the growth of the economy. The US has been working on increasing its exports and productivity in the American economy (Parker, 9).