Question

From the 1930s through 1950s government was the answer to society’s problems. Explain what I mean by this (include examples). In the 1960s and 1970s people started to question whether government was really so great. Discuss why people started to challenge the idea that big government could really provide solutions.

Answer 1

From the 1930s through 1950s, the economy was recovering from the rubbles of the Great Depression. It was at that time Keynes published his 'General Theory' advocating expansion of government sector in order to stimulate aggregate demand during economic crisis. In the aftermath of great depression, President Roosevelt announced the 'New Deal' to stimulate the economy. THus, during these periods, government was the answer to society's problem.

But in the 1960s and 1970s people started to question this premise since the expansion of the government has led to huge budget deficits of the government. Moreover, there was consistent ideological attack from the Monetarist school of thought led by Milton Friedman. Monetarist argued for using monetary policy both during boom and bust. Thus people sharted to challenge the idea that big government could really provide solutions.