Introduction
A worldwide economic depression led to a decline in employment and output. That happened in the 1930s after US stock prices declined, leading to the collapse of many markets and a reduction in the gross domestic product (GDP). The world’s GDP fell by approximately 15%, affecting personal income, prices, tax revenues, and profits (Pizzutto 77). Understanding the existence of the Great Depression is crucial for the economic courses of action that should be leveraged in present times. The Great Depression was caused by differing views, including the collapse of US stock markets, which led to strain after the Federal Reserve implemented its new policy on taxation and rising monetary delinquencies amid low investor output.
Firstly, understanding the causes, escalation, and combating of the recession is a paramount way to reduce the chances of the modern economy collapsing significantly. Secondly, readers must understand an aspect of political knowledge because, during the Great Depression, certain political moves were made to suppress the economy (Delton 608). For instance, the prominent rise to power of the Nazi Party in Germany was seen as an advantage for political development (Pizzutto 82). Thus, many countries diverted attention to reducing the pressure for political prowess, which meant the depression took time to end.
Thirdly, in terms of culture, the Great Depression serves as an eye-opener to the ways policymakers may fall prey to systemic mistakes. The mistakes are rooted in prioritizing the welfare of a select few over the general welfare of society (Delton 609). That means the social structure would be designed to limit the equal acquisition of property, where a country may have ten millionaires and ten million beggars, which raises concerns about stratification and class divisions.
Historical Debate
Siodla’s View
The debate has ensued on the underlying forces that combined to result in what would have been otherwise a contemporary business falling into a deep and long-lasting economic depression. An article by Siodla enlightens the reader about the possible strains experienced during the Great Depression, as presented in his main arguments (p. 26). The author highlights that real estate markets and the rise of tax crime in real debt compulsions caused distress (Siodla 27).
While reading the article, the reader will learn that tax obligations had taken a verge during the early years after the Federal Reserve had started raising tax rates in its monetary policy to balance the government budget. Therefore, understanding the concept by Siodla relates well to the stock market crash, which was symptomatic and later escalated further as a crisis that necessitated a long-lasting recession (p. 20). Moreover, Siodla provides other insights, such as declining house prices, which occurred as residential construction activities advanced during the 1930s (p. 24). Thus, most cities in the US and around the world experienced countercyclical flows in revenue accumulation.
Mathy’s View
On the other hand, a different opinion is ideologized regarding the start, development, and long-lasting eve of the Great Depression in the US and other countries. According to Mathy’s main argument, the US had experienced unprecedented uncertainty due to investment flaws, as many business merchants had yet to forecast the stream of new production lines amid rising innovation and industrialization at the time (p. 287). Approximately 40-70% of the Great Depression’s recessionary hitches were attributed to a decline in output and consumer durable purchases, which remained low (Mathy 292).
Thus, Mathy does not share Siodla’s opinion, which is that the depression was more closely associated with the stock market crash due to low demand for monetary resources and a decline in output. However, the two articles agree that issues such as cutting expenditures, raising taxes, and New Deal programs were planned as one way to recover from the urban financial crisis. Additionally, the authors share the same opinion that the lack of competitive private markets contributed to the economic difficulties, which exacerbated the depression.
The two articles employ different pieces of evidence to support their respective theses. Sodla employs conceptual framework analysis, which reveals that in more than 94 cities, the real per capita revenue increased in the 1920s and 1930s, but spending remained unchanged, resulting in the decline (p. 16). Mathy has employed autoregressions on data from 1919 to 1941, showing a decrease in investment and low output (p. 286). The evidence supports their thesis, as the analysis and data used relate to the stock market’s decline and investment challenges, respectively.
Conclusion
The readings change how the subject is understood in layperson’s terms because they provide inner perspectives on the economic, cultural, and political catalysts that led to the depression. For example, a reader understands that tax policy by the Federal Reserve did not lead to the rise in revenue but suppressed the consumer’s ability to withstand varying stock prices. The issues presented in the articles are still prevalent today because modern governments have increased taxation and altered the business environment through policies that strain the practice of buying and selling.
My personal background and life experiences influence my perspective on this topic, as I have not been part of the wealthy class, which highlights the inequality in access and expenditure. Additionally, my life experience with inflation enables me to understand why regulating the dollar in the market helps define most of the economic events that affect my day-to-day life. The current national issue is the rising cost of living in the US. Thus, upon understanding the readings, I would stabilize the economy through taxation while opening avenues for exports to obtain sufficient foreign exchange. I would also suggest ways to increase output and grow revenue through innovative market ventures.
Works Cited
Delton, Jennifer. “Beyond the New Deal Order: US Politics from the Great Depression to the Great Recession.” The New England Quarterly, vol. 94, no. 4, 2021, pp. 607–609. Web.
Mathy, Gabriel P. “How Much Did Uncertainty Shocks Matter in the Great Depression?” Cliometrica, vol. 14, no. 2, 2019, pp. 283–323. Web.
Pizzutto, Giorgio. “The Great Depression.” Palgrave Studies in Economic History, vol. 4, no. 6, 2019, pp. 75–102. Web.
Siodla, James. “Debt and Taxes: Fiscal Strain and US City Budgets during the Great Depression.” Explorations in Economic History, vol. 76, no. 6, 2020, pp. 10–28. Web.