#Automatic stabilizers economics full#
Comment & Analysis by Richard Gill The rational for using fiscal policy to maintain economic stability was very much influenced by the ideas of John Maynard Keynes who stated that total private spending on consumer goods and business investment might be insufficient to sustain national income at the full employment level.
The passage of the Employment Act of 1946 marked the commitment of the government to use its considerable power to insure that prosperity continued.
As President Truman signed the Employment Act of 1946 which no longer referred to full-employment instructing the government instead to promote maximum employment, production, and purchasing power. Truman took over the office of the President. Before the bill was passed FDR died, and Vice President Harry S. Out of this came the Full Employment Bill. FDR introduced a second Bill of Rights which included the right to a useful and remunerative job in the industries, or shops, or farms, or mines throughout the nation. After WWII there was a fear that the economy could slip back into a Depression if the governments spending used to maintain full employment for the war effort was removed.
By 1944, twelve million men and women were in uniform, and 66 million more had jobs supporting the mightiest war machine. Ultimately it was the war that put an end to the Depression. The lessons of the depression and war convinced economists and politicians alike that the government could prevent hardship and promote prosperity by manipulating taxes and spending.
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