Comparing Global Economic Storms: Great Lockdown (2020) vs. Great Depression (1930s) - Free Essay

Reflection Essay

At no point in history have governments deliberately and intentionally shut down their economies or forced factories and businesses to close. The COVID-19 pandemic has unleashed an economic tornado, paralyzing the global economy to the extent that analysts are drawing comparisons to the early 20th-century economic recession. Given such uncertainty, it is certain to look at the similarities and differences between the Great Lockdown (GL) in 2020 and the Great Depression (GD) of the 1930s.

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There are certain similarities between these two events, as highlighted by their gravity, economic and personal cost, and stock market volatility. First, this year's GL has resulted in a devastating economic impact that is more or less similar to the GD, especially when one considers the pace and scale of the economic outcomes. Due to the COVID-19 lockdown, the nation's GDP has witnessed an unprecedented decline, and experts forecast a global growth decline. Also, experts have warned that the current crisis could translate to increased unemployment that would break new records if the pandemic progresses. Similarly, between 1929 and '33, the country experienced a GDP decline and a peak in unemployment. Another similarity is that the market falls and rallies witnessed currently resemble what the nation has seen during the GD.

Whereas the COVID-19 crisis and the GD exhibit certain similarities, both events also differ. More specifically, the differences between these events stem from their causes. Regarding the GD, many would agree that it did not stem from a singular event. While the 1929 stock market crash acted as the only catalyst to this event, the leading cause was a series of policy errors that aggravated the ever-worsening economic crisis. At the time, the federal administration operated under a laissez-faire policy. As a result, policymakers decided to let the market crash liquidate itself by enacting policy decisions, including setting tariffs to protect American enterprises and tightening monetary policies. However, this proved to be a grave mistake as it led to corporate bankruptcies, banking collapses, homelessness, and poverty. Unlike the GD, the current crisis is not rooted in any economic origins. Instead, it stemmed from the sudden eruption of the global pandemic (a health crisis), which resulted in far-reaching economic effects, market instability, and a lockdown meant to stop the spread of a virus.

In brief, comparing this year's GL and the GD of the 1930s reveals significant similarities between the two events, especially the economic scars left behind. As outlined in the paragraphs above, these events significantly impacted the stock market, employment opportunities, and the nation's GDP. Nonetheless, these events exhibit notable differences, especially when one considers their causes. While the GD stemmed from several policy errors, this year's GL stemmed from a global pandemic. Drawing from the past, there are important lessons that the administration can learn about how to manage the current crisis.

Vocabulary

Karl Marx's account of the communist ideology accurately predicted that this political ideology would denote the end of private ownership of the means of production. Marx believed exploitative economic relations would compound societal problems, and subscribing to communism translated to the disposal of capitalist intentions and embracing of collective ownership.

Researchers have aimed to illustrate the link between bulk buying and economies of scale. Grounded on specific research methodologies, scholars have also shown that bulk purchases consist of acquiring larger quantities than usual. Moreover, this requires a lower than the regular unit price. Furthermore, bulk buying offers innumerable benefits.