Question

What were the positive and negative aspects to Harding’s laissez-faire approach?

Answer 1

one advantage to this philosophy is that businesses faced fewer government rules and regulations. this allowes businesses to do many things. often rules and regulations add tothe costs that business faces. sometimes, rules and regulations make it harder to do business activities. when businesses have fewer rules and regulations they are generally willing to take more risks and to invest in the economy. with fewer rules and regulations, businesses have a big incentive to try to maximize profits.

a disadvantage of this policy is that businesses may engage in risky behaviors that could lead to future economic problems. in the 1920s, there were few rules and regulations on banks and on the investiment industry.  to much money was being loaned to individuals and people could buy stocks woth only a small down payment. banks were also free to invest in the stock market. when the stock market crashed, many people and banks were financially ruined.