Tale One: Luddites.
Luddites suffered an economic setback. The demanded minimum wages, pensions, etc.
Kill the Luddites. Luddite activities were outlawed upon pain of death.
Textile jobs exploded. After the adoption of the machines, the textile industry's growth demanded orders of magnitude more employees.
Tale Two: 1930s.
Stock exchanges suffered an economic setback. Just like the Luddites, they demanded the government solve the problem.
The dole, the disguised dole in the form of make-work, free loans, and eventually a minimum wage.
Ten years of economic hell.
Sunday, May 7, 2017
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Before assuming cause and effect, look at the situations a bit more closely:
Despite their reputation, the Luddites were not trying to prevent mechanization. The textile industry would still have boomed if the mill owners and the government had caved in to their demands.
The stock exchanges were little more than an indicator of the economic problems of the 1930s, which were originally caused by the Fed's attempt to reimplement the Real Bills Doctrine. The government made significant responses than what you've mentioned. First they put up tariffs, which made things much worse (even though tariffs had a major factor in the growth of the British textile industry).
The government increased spending on public works, which should have helped a lot - but initially it didn't because they also raised tax rates, so the increased amount of money they put into the economy was counteracted by the increased amount they took out. This is a lesson most politicians nowadays have failed to learn - still they try, like President Hoover, to balance the budget in a stage of the economic cycle where doing so weakens the economy.
FDR took the dollar off the gold standard, which helped a lot, but also did a lot of highly counterproductive things such as regulating prices of agricultural commodities.
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