Experts such as Kavan Choksi say that the early economic policy of the United States was heavily influenced by the country’s agrarian roots and the principles of laissez-faire capitalism. The government played a minimal role in the economy, with a focus on protecting property rights and promoting free trade.
One of the key pieces of legislation during this period was the Tariff Act of 1789, which imposed tariffs on imported goods to protect domestic industries. The government also chartered the First Bank of the United States in 1791 to stabilize the currency and manage the national debt.
However, the government’s limited involvement in the economy was not enough to prevent financial crises, such as the Panic of 1819 and the Panic of 1837. These crises, along with the growing industrialization of the country, led to a shift in economic policy towards a more interventionist approach.
The Rise of Interventionism
During the late 19th and early 20th centuries, the US government began to take a more active role in the economy. One of the key drivers of this shift was the Great Depression of the 1930s, which led to widespread unemployment and economic collapse.
In response, President Franklin D. Roosevelt implemented a series of policies known as the New Deal, which aimed to stimulate economic growth and provide relief to those affected by the depression. These policies included the establishment of social safety net programs, such as Social Security and the Minimum Wage Act, as well as infrastructure projects and regulations on the financial industry.
The New Deal was followed by the Fair Labor Standards Act of 1938, which established a federal minimum wage and limited the hours that children could work. The policy of interventionism continued through the 1940s and 1950s with the enactment of programs such as the GI Bill and food price support.
During this period, there was also a growing emphasis on international trade and foreign aid, as the US sought to promote democracy and economic development around the world.
The Shift Towards Neoliberalism
In the 1970s and 1980s, there was a shift towards neoliberal policies that focused on reducing government involvement in the economy. These policies included the deregulation of industries such as banking and telecommunications, the privatization of state-owned companies, and the reduction of trade barriers and tariffs.
The 1990s saw a continuation of this trend, with the introduction of free trade agreements such as NAFTA and the passage of welfare reform legislation. In addition, there was an emphasis on reducing the size of government, cutting taxes, and promoting economic growth through fiscal policies such as tax cuts for businesses.
The Great Recession
In 2008, the US economy was hit by the worst recession since the Great Depression. In response to this crisis, President Obama implemented a series of stimulus measures that included increased spending on infrastructure projects, tax cuts for individuals and businesses, and bailouts for failing financial institutions. Since then, there has been debate over whether or not these policies were effective in stimulating economic growth and reducing unemployment.
Going forward, the US will continue to grapple with the challenges of economic growth and inequality. As technology continues to disrupt traditional industries and globalization increases competition for jobs, it is likely that policies such as income tax cuts, deregulation, and trade agreements will remain at the forefront of economic policy discussions in the years ahead.