I have lived through six previous recessions, but I only remember four of them. Bad economic times are downers, for the economy and our state of minds. Even knowing those six economic downturns only lasted 1-2 years each, it always feels like we’re on the brink of doom when we go into one. It doesn’t help that the talking heads constantly bring up the Great Depression, which lasted 10 years, and peaked with 25 percent unemployment.
I’m glad those commentators don’t know about the Long Depression, 1873-1896 that lasted 23 years. I wonder how many people remember the survivalists back during the early 80s depression, when people bought land and guns thinking the end of civilization was around the corner. It’s very easy for dark economic clouds to bring doom and gloom that make us all a little paranoid and crazy. What we need is light therapy for our economic depression.
My favorite movies were those made during the ten years of the Great Depression, including both the gritty social ones focusing on the bad times, and the glittery ones that help people escape their daily woes. Tom Brokaw’s book The Greatest Generation tells us how greatness came out of those bad times. If we’re entering into long years of hard times it might help to study that decade.
If we’re lucky, times won’t get that bad. And how bad are bad times anyway? The worst is losing a job and your home – check out The Grapes of Wrath for insight into that kind of bad times. I remember my parents and grandparents talking about the great depression and how bad it was, but they also had lots of fond memories from those years.
Things are much different now than back then. We have social security, medicare, unemployment checks, food stamps, and all kinds of other social programs and charities to help people. I don’t think we’ll see hobo jungles outside our large cities, or hordes of men riding the rails looking for work, or long bread lines. We are going to see a lot of people out of work. We’ll probably see a lot of people sharing apartments and homes, and a lot of two family incomes become one. I expect a fair number twenty-somethings deciding it’s a good time to move in with their parents awhile and finish up that college degree.
Back during the depression the number of people in a household was much higher than it is today, sometimes including three or even four generations. We live in times when everyone wants their own house or apartment and that’s an extravagance. Bad times cause people to band together and share expenses, and everyone learns to be frugal.
Of course, everyone suddenly concentrating on the value of a buck only causes more layoffs and worsens the recession and makes people talk about depression. Recessions are psychological as much as economic. If you’re afraid for the future you won’t spend money, but consumer confidence and spending is how we get out of a recession.
A recession is when the economy pulls back from a boom, and business and families decide to cut the fat and go on a spending diet. Recessions are a readjustment period where we excise the excesses and get practical. I expect a lot of people to cancel their $100 a month cell phone plans, cut their Netflix plan from 5 discs to 2 out at a time, trim a lot of cable television options, stop buying toys they just have to have but only use for a week or two before thinking about new toys, or rethinking $50 dinners that are wolfed down like fast food. People who used to brag about drinking $25 dollar bottles of wine will now brag about the $12 great discoveries they are making.
Folks shopping at Target who have been loyal brand users will suddenly notice store brands have the same chemical compositions for dollars less. When people realize that $400,000 houses are really worth $150,000, they will start wondering about the value of a $50 video game or $10 movie tickets. Women with husbands making six figures will strangely discover coupons and thrift shop clothing.
My advice is if you’ve been living paycheck to paycheck, now is the time to learn how to manage money. But if you’ve always managed your money well and have savings, now is the time to be patriotic and go shopping.
If you’ve got money to spend, it’s a great time to do green remodeling. Read Hot, Flat and Crowded to get an idea of what Thomas Friedman calls ET economics. Friedman predicts America could get out of this economic slump and create a world-wide boom by focusing on environmental technology, ET, that will rival the IT boom, caused by information technology.
I hope Barack Obama uses the recession to redesign the growth economy into a green steady-state economy. The NY Times is reporting that bad economic times is pushing global climate problems out of the news. Reengineering our society to be green, will cost jobs and create them. Now is the time to remember that.
What I hate about recessions are the funding cuts to big science as if the quest to understanding reality is one of our most wasteful extravagances. How many jobs and spin-off technologies would be created if Congress took that $34 billion they are thinking of giving to the Detroit Big 3 and put it into the colonization of the Moon and Mars? Or at least starting a renewable energy industry.
I don’t know why I write these essays about economics. They get no hits. I think they are therapeutic. We really could be on the brink of a terrible economic collapse and my writing Pollyannaish blog posts of hope help me get through the chills of economic ghost stories.