"Although the economic growth of the United States between 1860 and 1900 has been attributed to a governmental policy of laissez-faire, it was in fact encouraged and sustained by direct government intervention." Assess the validity of this statement.
Is there any more information on laissez-faire policy?
http://en.wikipedia.org/wiki/Laissez-faire
Thank you.
On the website it says:
"The term is often used to refer to various economic philosophies and political philosophies which seek to minimize or eliminate government intervention in most or all aspects of society."
does this mean that the original statement is false?
Yes, certainly! Let's begin by understanding what the term "laissez-faire" means in the context of economic policy. Laissez-faire is a French term that translates to "let it be" or "leave it alone." In the context of economics, laissez-faire refers to a policy approach that advocates minimal government intervention in the economy. It is based on the belief that free markets, operating without government interference, will lead to optimal outcomes and economic growth.
During the period between 1860 and 1900 in the United States, commonly referred to as the Gilded Age, the country experienced significant industrialization and economic expansion. The question posed suggests that although laissez-faire policy is often credited for fostering this growth, it was actually sustained and promoted by direct government intervention.
To assess the validity of this statement, one approach is to consider the various ways in which the government intervened during this period to support economic growth. Here are a few examples:
1. Infrastructure Development: The government played a vital role in promoting economic growth by investing in infrastructure development. This included the construction of railroads, roads, canals, and ports, which facilitated the movement of goods, expanded markets, and spurred economic activity.
2. Tariffs: The government implemented protective tariffs, which were taxes on imported goods, to protect domestic industries from foreign competition. Tariffs made imported goods more expensive, making domestic products more competitive in the market and stimulating industrial growth.
3. Land Grants: The government provided substantial land grants to railroad companies, encouraging the expansion of rail networks across the nation. This facilitated the transportation of raw materials, goods, and people, further fueling economic development.
4. Subsidies: The government granted subsidies to various industries to promote their growth. For example, agricultural subsidies were provided to farmers to incentivize increased productivity and support the expansion of the agricultural sector.
5. Regulations and Enforcement: Although laissez-faire policy implies minimal regulation, the government did intervene to establish and enforce regulations that protected private property rights, ensured fair competition, and prevented monopolistic practices. These regulations aimed to create a stable and predictable economic environment, which facilitated economic growth.
Considering these interventions, it can be argued that the statement holds validity. While the U.S. government adhered to a broad policy of laissez-faire, it actively intervened in certain areas to promote economic growth. The role of government intervention during this period cannot be overlooked when analyzing the factors contributing to the economic expansion experienced by the United States.