13.4 Long-term economic and social consequences

The Great Depression reshaped America's economic landscape, prompting a massive expansion of government's role. New Deal policies introduced social welfare programs, labor reforms, and financial regulations that continue to impact the economy today. These changes laid the foundation for modern economic policy.

The Depression also transformed American politics and culture. It led to a realignment of political parties, with Democrats embracing liberal policies and Republicans opposing government intervention. Cultural shifts emphasized frugality and social awareness, reflected in art, literature, and music of the era.

Economic Policy and Political Landscape

Impact of Depression on economic policy

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• Government role expanded through creation of regulatory agencies and implementation of social welfare programs
• Keynesian economics gained acceptance emphasizing government spending to stimulate growth and countercyclical fiscal policy
• Welfare state grew with Social Security Act of 1935, unemployment insurance, and Aid to Families with Dependent Children (AFDC)
• Labor reforms enacted including National Labor Relations Act (Wagner Act) and Fair Labor Standards Act
• Banking and financial sector reformed via Glass-Steagall Act and Securities and Exchange Commission (SEC)
• Shift towards deficit spending became more accepted economic policy
• Federal involvement increased in infrastructure development (roads, dams, electrification)

Political realignment from New Deal

• Democratic Party shifted towards liberal policies while Republicans opposed New Deal programs
• New Deal coalition emerged uniting labor unions, African Americans, urban voters, intellectuals and liberals
• Executive power expanded under FDR's leadership style and use of executive orders
• Modern liberalism and conservative opposition to government intervention emerged as new political ideologies
• Voting patterns changed as African Americans shifted to Democratic Party and Southern states realigned
• Interest groups gained increased role in shaping politics and policy
• Party platforms and policy priorities impacted long-term (social programs, role of government)

Social and Cultural Legacies

Cultural legacies of Depression era

• Art movements like Social Realism and American Scene painting reflected economic hardship
• Literature such as "The Grapes of Wrath" and "Let Us Now Praise Famous Men" depicted struggles
• Farm Security Administration photography project documented rural poverty (Dorothea Lange's "Migrant Mother")
• Folk music revival and protest songs by Woody Guthrie expressed working class values
• Films offered social commentary and escapist entertainment to cope with hard times
• American values shifted towards frugality, resourcefulness, awareness of inequality
• New Deal public works left legacy of murals, improved parks enhancing national identity

Effectiveness of New Deal measures

• Banking stabilized through Federal Deposit Insurance Corporation (FDIC) and SEC oversight
• Unemployment addressed by job creation programs (Civilian Conservation Corps, Works Progress Administration)
• Agricultural reforms like Agricultural Adjustment Act and Rural Electrification Administration aided farmers
• Infrastructure developed via Tennessee Valley Authority and Public Works Administration
• Long-term stabilizers established (Social Security, unemployment insurance)
• Limitations persisted with high unemployment and uneven recovery across regions
• Post-war growth foundation laid through government economic planning and workforce development
• Financial regulations provided stability for banking and securities markets
• Income inequality and wealth distribution impacts debated
• World War II's role in ending Depression remains topic of discussion among economists