A Note on Recession

Recession has been appearing in headlines of all the newspapers and magazines for past few days. It is no surprise that it has occupied a place in this newsletter too. Recession is not new to the economic world as it has occurred 32 times in the past 150 years, according to the economists.

Different nations tackle the economic depression in its own way. And the successful way is always uncertain. Few advice to cut the taxes and others advise the government not to change any economic policies for the sake of recession. The period during 1929 to 1939 is termed as great depression in the world history, when banks collapsed in US and stock markets crashed worldwide; 13 million people became unemployed. Industrial production fell by nearly 45% between the years 1929 and 1932. Home-building dropped by 80% between the years 1929 and 1932. From the years 1929 to 1932, about 5000 banks went out of business.

When Franklin. D Roosevelt was inaugurated as the president in 1933, he named the economic measures to be taken to recover from the great depression as The New Deal. In the first three years, his policies concentrated on the farm sector. The cost of the crops was raised and some growing crops were plowed out to keep up the cost. Though this raised the profit of the farmers and the agriculture sector was settled, which made the prosperous again.

Other than the farm sector, the Roosevelt’s government created employment for people so as to abate their poverty. Some processes introduced during the day are still active now like Tennessee Valley Authority (TVA), aimed to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tennessee Valley, a region particularly impacted by the Great Depression. Dams were built to generate electricity then, not only created employment, they generate hydraulic power even today.

From the great depression, the government has to understand that employing people and making their use to build infrastructure will not only recover from recession, but also improve the country structure. Our country has archaic public systems and the Information Technology has not reached all the public sectors. The government can employ IT professionals for billing automation, digitizing the paper documents. Etc. It is in the hands of our national leaders to convert the depression into prosperity.