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Posted on April 20th, 2012, by

The second stage of the New Deal basically aimed at the recovery of the national economy after the Great Depression and its negative effects. In actuality, the measures undertaken during the first stage of the New Deal did not bring the recovery to the national economy but only stabilize it. At this point, it should be said that the stabilization was an essential condition of the recovery and the second stage of the New Deal could not be implemented until the first stage was unaccomplished. In fact, the stabilization of the national economy, including the stabilization of inflation and prices, allowed companies to forecasts the development of their business, while the decrease of unemployment contributed to the growth of the buying power of Americans that also produced a stimulant effect on the development of business. In addition, the assistance of the state facilitated the economic recovery of the country.

However, the complete recovery of the USA after the Great Depression was possible only after the accomplishment of the second stage of the New Deal. In this respect, it should be said that the second Ne Deal lasted for a considerably longer period of time form 1935 to 1941 and was actually interrupted by World War II, when the country had to mobilize and the government could not develop social programs anymore.

On analyzing the implementation of the second New Deal, it should be said the government continued the relief and recovery measures launched in terms of the first New Deal. However, in addition to the measures used during the first stage of the New Deal, the government provided for social and economic legislation to benefit the mass of working people. What is meant here is the fact that the second stage of the New Deal was oriented only on the stabilization of the national economy but it mainly aimed at the assistance to people in need, who could not afford living without the external support from the part of the state. at this point it is worth mentioning the fact that a large number of Americans lived in poverty at the epoch and could not afford elementary, basic health care services, education, etc. Hence they could not exercise their basic human rights and the state, for the first time in history of the USA, took social responsibility of these people.

During the second stage of the New Deal, the social security system was established in 1935 (Heintz and Folbre, 2000, p.144). This was an extremely important step in the regard to the increasing role of the state in social and economic affairs of the country because the introduction of the social security system implied that the state either provided the basic social support to people who cannot afford basic services and products they need for survival or it obliges companies to ensure the social protection of employees. In such a way, ordinary Americans could feel secure in face of a crisis because the state ensured their protection. This means that the state took social responsibility, which it had never had before. In the context of the socioeconomic situation at the epoch, it was a logical decision because the Great Depression led many American families to an extremely desperate position when they could not afford living.

At the same time, the state kept working on the creation of specialized state agencies and institutions which could have helped to recover the US economy and citizens after the crisis. For instance, in 1935, the National Youth Administration and the Work Projects Administration were set up (Heilbroner and Milberg, 1998, p.218). In such a way, the state ensured that the young people will have larger opportunities to get employed. At this point, it is worth mentioning the fact that many young employees were deprived of an opportunity of being employed because of the lack of experience, while the creation of the two administrations mentioned above could solve this problem or, at any rate, prepare and assist young adults to find a job and earn for living as well as to protect their rights in case of their violation.

Furthermore, in 1938, the Fair Labor Standards Act was implemented. This act was an important step toward the elimination of discrimination in the process of recruitment and employment. Obviously, it was crucial at the epoch of crisis to protect people from the violation of their rights and provide them with equal opportunities to get employed along with other people. In such a way, the state established rules of the game in the labor market in order to avoid unfair competition or exclusion of some categories of Americans from the labor market in the time of a profound socioeconomic crisis. At the same time, the state decreased the pressure on the state budget since the fair standards of employment decreased the expanses of the state on social programs for the most deprived categories of the US population which needed the most substantial financial support from the part of the state.

In addition, the Revenue Acts of 1935, 1936, and 1937 provided measures to democratize the federal tax structure. In fact, the state attempted to close the gap between the level of income of the rich and the poor and decrease the fiscal pressure on the middle class, which constituted the majority of the US population. In such a way, the tax structure became more effective in regard to a more equal distribution of income and national wealth in the USA. At the same time, it should be said that some of the New Deal measures were invalidated by the Supreme Court. Nevertheless, they proved to be effective and helped to overcome the economic crisis and negative effects of the Great Depression.

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