Why is the US economy so stable?

Mudassir Ali
Apr 15, 2020 08:19 AM 0 Answers
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Why is the US economy so stable?

Mudassir Ali
- Apr 15, 2020 08:19 AM

The US economy is still the largest in the world… Moreover, it is probably the most diverse and multi-faceted in the world — that is, it is not even remotely close to depending on one industry or even one area. And because the US economy is so large and diverse, it’s hard to turn it around, for the same reason it’s not easy to turn an aircraft carrier or a giant curise ship around.
Nonetheless, an iceberg famously sunk the Titanic. Before Franklin Roosevelt’s New Deal reforms — which in particular reformed practices on Wall Street — the US economy was like the Titanic, and the Great Depression was the iceberg that nearly sank it.
The US economy is stable as long as we keep certain reforms in place that were passed during the 1930s and beyond. During the 1990s and 2000s (yes, I’m sad to say that Bill Clinton signed some of the bills, but Republicans were the most enthusiastic de-regulators)… During this time of rolling back Wall Street regulations, we got an economy under “W” and the Republicans that nearly sank the economy, as if it were the Titanic.

Let’s hope that we choose instead to put in the reforms and regulations that keep the ship afloat. Regulation of Wall Street is the equivalent of slowing down in an iceberg field, acknowledging warnings, and having enough life boats. “Free enterprise” says you don’t have to do any of those things. But “free enterprise” led to a lot of people dying on that “ship that couldn’t sink.”

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