1
00:00:01,070 --> 00:00:08,710
Hello class, today I'm going to explain the different proposals for a solution to the economic crisis in 1929.

2
00:00:09,410 --> 00:00:17,789
Because when the crisis emerged, almost each country tried to solve the crisis by its own method.

3
00:00:18,789 --> 00:00:27,109
For instance, some countries in Western Europe promoted the autarchy policy in terms of the economy,

4
00:00:27,109 --> 00:00:33,789
which was a self-sufficient economy, una economía autosuficiente,

5
00:00:34,530 --> 00:00:40,770
which tried to live only with the domestic resources of a country.

6
00:00:41,929 --> 00:00:47,869
So, as a consequence, they tried to limit the imports,

7
00:00:48,469 --> 00:00:53,149
the products that you buy abroad, as much as possible.

8
00:00:53,890 --> 00:01:20,849
Mussolini in Italy, Hitler in Germany, and even Franco in Spain were in favor of this policy, but Germany, Italy, and Spain didn't have as much raw materials, key materials, as other countries in the world, such as the United States, the Soviet Union, or even Great Britain.

9
00:01:20,849 --> 00:01:43,909
For example, Germany didn't have as much coal and oil, which were important raw materials, as Great Britain, and for this reason they were not able to live only with their domestic resources, and this policy ended in failure.

10
00:01:43,909 --> 00:01:57,010
Actually, this policy ended in failure also because the vast majority of the countries adopted the ideas from John Maynard Keynes.

11
00:01:57,189 --> 00:02:11,969
Who was Keynes? Keynes was a brilliant economist from Great Britain, from Cambridge University, and Keynes was in favor of the state intervention of the economy.

12
00:02:11,969 --> 00:02:31,430
He thought that if the state would invest more money in key sectors of the economy, such as public works, obras públicas, or in the industry, or even agriculture, there will be more jobs.

13
00:02:31,430 --> 00:02:40,330
And if the level of unemployment in a country increased, workers would consume more.

14
00:02:41,330 --> 00:02:45,669
And this is the idea that Keynes tried to get.

15
00:02:46,490 --> 00:02:51,250
It was a solution because the economy would recover.

16
00:02:52,090 --> 00:02:59,689
When President Roosevelt became the president in the United States in 1933,

17
00:02:59,689 --> 00:03:09,909
he implemented the ideas from John Maynard Keynes in his political and economical program which was

18
00:03:09,909 --> 00:03:18,409
the New Deal. Now I'm going to explain the New Deal which contained different ideas, different

19
00:03:18,409 --> 00:03:26,909
solutions from John Maynard Keynes. For example, Roosevelt was in favor of the regulation of the

20
00:03:26,909 --> 00:03:37,129
banks. He forced them to give loans with a low interest rate to the common people. And in

21
00:03:37,129 --> 00:03:46,949
exchange for that, the banks got money, funds, also money from the state, because remember that

22
00:03:46,949 --> 00:03:56,629
the vast majority of them were in crisis due to the economic situation in 1929. This is actually

23
00:03:56,629 --> 00:04:03,509
the end of the speculation of Wall Street because the government in the United States

24
00:04:03,509 --> 00:04:14,629
increased its own supervision over the banks. Actually, the state in the United States,

25
00:04:14,990 --> 00:04:23,350
Roosevelt, guaranteed the deposits for the people, for the industries, and also for the farmers

26
00:04:23,350 --> 00:04:27,910
in exchange for more controls over the banks.

27
00:04:28,910 --> 00:04:36,730
In the end, Roosevelt even rolled out an investigation against Wall Street.

28
00:04:37,509 --> 00:04:48,829
Rollout means, it's a phrasal verb that explains that the state gave the order to control the banks.

29
00:04:48,829 --> 00:04:53,410
they gave the order to investigate Wall Street

30
00:04:53,410 --> 00:04:57,329
and the person in charge was perfect.

31
00:04:58,550 --> 00:05:03,189
The person in charge of this investigation was Joe Kennedy,

32
00:05:03,550 --> 00:05:06,790
one of the Roosevelt friends,

33
00:05:06,790 --> 00:05:12,129
and actually he will be in the future

34
00:05:12,129 --> 00:05:19,959
Kennedy's father, I mean the president in the 60s,

35
00:05:20,139 --> 00:05:24,160
And Joe Kennedy was perfect for this job

36
00:05:24,160 --> 00:05:28,160
because he earned a lot of money before the crisis

37
00:05:28,160 --> 00:05:34,860
and he knew perfectly well how Wall Street works

38
00:05:34,860 --> 00:05:40,360
for the reason the investigation was successful.

39
00:05:41,879 --> 00:05:47,060
Roosevelt also gave subsidies, money to the landowners

40
00:05:47,060 --> 00:05:49,459
and to the industrial businesses

41
00:05:49,459 --> 00:05:53,459
in order to limit their production.

42
00:05:54,220 --> 00:05:58,160
Because if the farmers and also the owners of the companies

43
00:05:58,160 --> 00:06:02,420
produced a lot of products without control,

44
00:06:02,420 --> 00:06:07,060
they would produce more offer than demand.

45
00:06:07,800 --> 00:06:11,920
And as a consequence of that, there will be a decrease in the prices

46
00:06:11,920 --> 00:06:16,459
and also in the profits, which was really bad,

47
00:06:16,459 --> 00:06:21,319
not only for the owners of the companies, but also for the economy.

48
00:06:23,220 --> 00:06:28,800
Roosevelt reduced also the working hours, because before the crisis,

49
00:06:29,579 --> 00:06:33,779
there was no limit to the number of working hours.

50
00:06:34,720 --> 00:06:40,660
But as there was a lack of jobs, Roosevelt thought,

51
00:06:40,980 --> 00:06:45,800
due to these ideas from John Maynard Keynes,

52
00:06:45,800 --> 00:06:53,720
that it was better due to the lack of jobs to serve the jobs.

53
00:06:53,720 --> 00:07:01,620
And for this reason, workers began to reduce the number of working hours

54
00:07:01,620 --> 00:07:07,899
so as to get more jobs, so as to serve the jobs in the market.

55
00:07:08,819 --> 00:07:15,180
And Roosevelt, as a consequence of that, implemented the eight-hour workday.

56
00:07:15,800 --> 00:07:23,120
Also, Roosevelt gave a package in order to protect the workers.

57
00:07:24,040 --> 00:07:37,639
He set up the minimum wage, the salario mínimo, the minimum wage, and also the unemployment insurance, just in case workers would lose their jobs.

58
00:07:37,639 --> 00:07:45,899
So, in general, broadly speaking, he gave more protection to the workers.

59
00:07:46,519 --> 00:07:52,399
So, what do you think, after hearing all of these measures, what do you think?

60
00:07:52,879 --> 00:08:01,699
If we look at the Wall Street crash in 1929, do you think that history will repeat itself in the future?

61
00:08:01,699 --> 00:08:04,740
Let me tell you a short story.

62
00:08:04,740 --> 00:08:31,420
In 1973, this man, Frederick Hayek, got the Nobel Prize, and he was also a prestigious economist, an Austrian prestigious economist, and Hayek was completely, completely against John Maynard Keynes.

63
00:08:32,100 --> 00:08:37,279
Actually, Hayek was in favor of the deregulation of the economy

64
00:08:37,279 --> 00:08:44,500
because he thought that the state should not intervene in the market,

65
00:08:44,500 --> 00:08:52,240
in the economy, because the market works perfectly well itself.

66
00:08:53,279 --> 00:08:59,779
So as a consequence of that, many, many states brought,

67
00:08:59,779 --> 00:09:15,039
They got the ideas from Frederick Hayek, and they began to dismantle the mechanisms of control of the economy and the companies.

68
00:09:15,039 --> 00:09:34,039
Several important political figures at that moment, such as Margaret Thatcher in Great Britain and also Ronald Reagan, began to dismantle the mechanisms of control of the economy.

69
00:09:34,039 --> 00:09:43,039
They stopped controlling Wall Street and also other important markets in the world.

70
00:09:43,039 --> 00:09:52,159
the wall, they turn a blind eye to the mechanisms of control, and as a consequence of that,

71
00:09:53,220 --> 00:10:03,159
the crisis, a new crisis, emerged in 2007, and the origin was again Wall Street.

72
00:10:04,159 --> 00:10:11,120
So, what do you think? Should the state, after hearing this lesson, what do you think? Should

73
00:10:11,120 --> 00:10:14,159
the state control the economy or not?

74
00:10:15,279 --> 00:10:18,980
They should. Do you think that the state should control

75
00:10:18,980 --> 00:10:23,080
the market or not? We will see this important

76
00:10:23,080 --> 00:10:27,039
debate in class. Thank you for your attention and

77
00:10:27,039 --> 00:10:27,460
bye bye.