The Great Depression

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Why was there disagreement between Republicans and Democrats as to how to solve the USA's economic difficulties between 1929 and 1941?

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Republicans believed the markets should be left to solve economic crises with as little government intervention as possible. They believed in small government and believed the federal government should primarily be in the business of defending the country against outside military threats, not providing for the general welfare.

The New Deal programs supported by the Democrats and popular with the public at large (Roosevelt won landslide reelections) took the opposite stance. Democrats at that time believed government's purpose was to provide for its people, both protecting them from capitalism's worst predations and offering them a hand up to a better life. The Democrats got behind Keynesian economics, which argued that governments should actively intervene to pump money into a depressed economy to jumpstart change. This they did as far as they were able, starting jobs programs, Social Security, federal home mortgage programs, and other expansions of the federal government. The Democrats at that time also believed government had a role in protecting the vulnerable and so passed child labor laws and minimum wage laws among other measures meant to help people to a better life.

In short, the Republicans thought markets were the most efficient means of building a healthy economy while the Democrats thought a mix of private enterprise and government initiative was the best way out of the crisis of the Depression and toward permanent economic strength. We need to remember too that the Depression was not simply another economic blip on the radar but the almost complete collapse of the United States economy, which one could argue called for strong and active measures. What those measures were was the point of contention between the parties.

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There was disagreement because these two political parties have fundamental differences with regard to the proper role of government in the economy.

Republicans tend to be much more of believers in laissez-faire capitalism.  They feel that an economy does best when the government leaves it alone.  By contrast, Democrats are much more likely to prefer that the government intervene in the economy.  They do not believe that the market can fix itself.  Therefore, Democrats wanted the New Deal and perhaps more while Republicans would have preferred to have the government stay out of things and let the economy heal itself.  They would argue the recovery would have been faster if this had been done.

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