5 Government-to-business interventions: Did they work?

During the BP (BP) Deepwater Horizon oil spill on April 20, the US government deployed 17,500 National Guard troops to respond to the environmental crisis. More than 484 miles of shoreline were affected and 81,181 square miles of Gulf of Mexico waters were closed to fishing. When government intervenes, things get done, but many wonder to what extent government intervention should play a role in private sector problems, and if it even works.

Examples of government interference in the economy

The Cleveland Railroad Dilemma

The workers of the Pullman Palace Car Company of Chicago withdrew one day in the spring of 1894 to protest low wages. The Union of American Railroads supported the workers and announced that after the failure of the negotiations, trains that had Pullman cars would not be operated. President Grover Cleveland became involved in the dispute when routes beyond Chicago were disrupted.

He deployed military soldiers to force protesters to return to work, claiming that because the United States mail service had been disrupted, he had a constitutional right to do so. More than 30 people were killed in violence between those on strike and the military, generating public sympathy for labor activists.

Roosevelt New Deal

When former President Franklin D. Roosevelt replaced his predecessor Herbert Hoover in 1933, the Great Depression had taken firm and relentless control over the nation. In his inaugural address, Roosevelt famously said: “So first of all, let me affirm my firm belief that the only thing we have to fear is fear itself: nameless, irrational and unjustified terror, which paralyzes efforts. necessary to convert withdrawal into advance. ”

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The president unveiled his New Deal plan, which involved creating government programs that put people to work in a variety of fields, such as building large-scale infrastructure. The New Deal was credited with revitalizing the economy and was very popular, and Roosevelt was re-elected for another term.

Truman and the steel industry

After contract negotiations between the United Steel Workers and steel producers deteriorated in 1952, former President Harry Truman took control of the steel industry in an effort to avoid a strike as the Korean War continued. The move was highly controversial. According to the Miller Center for Public Affairs, 43% of those surveyed said they did not support the high level of government intervention on the matter.

The United States Supreme Court found Truman’s initiative unconstitutional; the steel industry became private again and steel workers immediately went on strike for 53 days. An editorial in Life The April 1952 magazine stated that Truman “demonstrated scandalous bias in a serious labor dispute, and gave his own constitutional powers a dangerous and quite unnecessary stretch.”

Nixon oil crisis

Between 1971-1973, former President Richard Nixon imposed the New Economic Policy, which, for a period of 90 days, would freeze wages and prices in an effort to combat inflation. Although the measure appeared to have a stabilizing effect, inflation once again became a threat once controls were relaxed. Nixon reimposed the controls, in part because of OPEC’s oil embargo, but this time it didn’t work.

In The dominating heights, Daniel Yergin and Joseph Stanislaw write: “Ranchers stopped sending their cattle to market, farmers drowned their chickens, and consumers emptied supermarket shelves.” Although Nixon resigned only four months later, oil price controls continued and the United States began trying to free itself from dependence on foreign oil resources by increasing domestic exploration. Still, the stock market in the 1970s was a disaster, losing as much as 40% over an 18-month period.

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While it is difficult to say whether government intervention is always a good thing, it is easier to say this: Many presidents have made a mistake in their method of intervening in the private sphere. But there is an expectation that the president, whoever he may be, will intervene when the country is in dire straits. But the often exuberant way in which they act makes it impossible to predict what the outcome may be.


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Mark Holland

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