S-H was indeed enacted after the Depression had begun. However, passage of S-H was much discussed before the stock market crash of October. It cannot be measured how much of an impact this prospective legislation had on the events before its passage, but that such a large number of economists lobbied against its passage could not have helped the economy. Even though the Depression was global, the global aspect required a catalyst and S-H was the catalyst. The resultant collapse in international trade due to S-H had a negative impact in other countries and prolonged the economic recovery of the US.
Instead of bad investments, although they are partly the result of this, I would blame the monetary policies of the Federal Reserve. The inflationary expansion of the 1920s was the cause of the market crash in 1929. Reserve Chairman Harrison had to tighten the monetary policy to cure the ills of the inflationary boom and his decision to do this was a cause of the market crash.; but instead of letting the market correct itself, the government intervened and exacerbated the problem as I have previously pointed out.
I would agree that in certain instances the government is more efficient at providing goods, externalities and etc. However, the private markets can actually be more efficient than the government in cetain instances. As I am sure you are aware , the example of the lighthouse displays how the private market can be more efficient than the government at providing public goods.
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