Since the Great Depression, America has been in a state of economic turmoil. Many people feel that this is due to government control over the economy. The U.S. pursued laissez-faire policies during periods where there was an abundance of jobs and goods for all Americans; but when faced with a shortage of high unemployment, they pursued more interventionist policies such as Keynesianism and protectionism.

bridge, river, city @ Pixabay

However, many economists believe that it is not the role of the government to pursue any particular policy on its own – rather, it should react to changes in the market by changing which aspects are regulated (interest rates) or by providing stimulus through tax cuts or spending increases if needed. In essence, the economy should not be controlled by government intervention from on high; rather, it should be left to market forces.

If the American people need a lesson in how this has historically worked, they need only look at laissez-faire policies during periods of economic prosperity and compare them with Keynesianism and protectionist policies employed when we have faced an economic depression or recession (the Great Depression).

In theory, these different approaches are simply variations on one theme: while all may work some of the time in some situations, no single approach is perfect – which is why sometimes you will see economists advocating for strict supply-side economics when prices are too low (Keynesian) but more restrictive monetary policy if inflation gets out.

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