The 2nd Great Depression

[Mickey123]

The unemployment rate in the U.S. is now at its highest level since the Great Depression.  It's somewhere in the neighborhood of 25% by this point.

And there is no end in sight for any of this.  Nothing can return to normal while the virus still spreads, and it isn't going to stop until we have a vaccine, which is 6 months or a year or two away (or possibly even never).  By the time the virus is behind us and we can try to return to normal, we're going to find that we can't.

It's easy to drop a glass on the floor and shatter it, and vastly more difficult to somehow put all the pieces back together.  Once you have enough people out of work, and enough people who've lost confidence in the economy and who have stopped spending and are saving everything, how do you reverse this?  People aren't spending, businesses aren't hiring because they don't have the sales to support new hires, large numbers of people are out of work and have no jobs they could possibly get.  With so many people not working and not producing anything, society is much poorer than it was.

The government, which is tasked with fixing all this, is much poorer than it was, as its tax revenue is considerably lower than it once was.  It doesn't have the money to just hire 25% of the population and pay them all to do who knows what.

The last Great Depression didn't end until World War II.  When will this one end?

[Bob Butler 54]

It won’t end. The turnings don’t travel backwards. The new society adapted to solve the crisis problem becomes the new normal.

I have long thought we were too addicted to luxuries. While the New Deal adjusted the retirement age and the work week expectation, the numbers that they settled on became fixed and unchangeable since. In order for the elites to eek out maximum profits, they created in part though advertising a society that was hooked on material things they didn’t need.

The virus is giving us a chance to rethink that. Suddenly, the older folks shouldn’t be in the workplace, and we find no need to buy certain things. Productivity has increased, so we don’t need to put so many hours in. Resources are becoming more expensive. If we still want to use labor to distribute wealth, start by dividing the amount of labor needed by the number of laborers. Don’t worship old numbers.

If we have 25% unemployment, can you just drop the amount of labor expected by 25%? Or do you have some thing about providing the elites with absurd wealth?

Stop dreaming about going backwards.

[pbrower2a]

(05-28-2020, 10:35 AM)Mickey123 Wrote: The unemployment rate in the U.S. is now at its highest level since the Great Depression.  It's somewhere in the neighborhood of 25% by this point.

And there is no end in sight for any of this.  Nothing can return to normal while the virus still spreads, and it isn't going to stop until we have a vaccine, which is 6 months or a year or two away (or possibly even never).  By the time the virus is behind us and we can try to return to normal, we're going to find that we can't.

It's easy to drop a glass on the floor and shatter it, and vastly more difficult to somehow put all the pieces back together.  Once you have enough people out of work, and enough people who've lost confidence in the economy and who have stopped spending and are saving everything, how do you reverse this?  People aren't spending, businesses aren't hiring because they don't have the sales to support new hires, large numbers of people are out of work and have no jobs they could possibly get.  With so many people not working and not producing anything, society is much poorer than it was.

The government, which is tasked with fixing all this, is much poorer than it was, as its tax revenue is considerably lower than it once was.  It doesn't have the money to just hire 25% of the population and pay them all to do who knows what.

The last Great Depression didn't end until World War II.  When will this one end?

The Great Depression was a severe meltdown followed by slow growth out of it. Government played its role in big projects that hired large numbers of construction workers who would otherwise have been out of work. The 1930's were the time of Boulder Dam, the Tennessee Valley Authority, the building of such bridges as the George Washington Bridge and the Golden Gate Bridge, and some of the first American expressways (the Pasadena Freeway and the Ramona Parkway (the latter now part of the course of the San Bernardino Freeway in Greater Los Angeles) and just before the start of World War II the Detroit Industrial Freeway, the divided US 66 (some of it up to modern freeway standards) between Chicago and St. Louis, and the original section of the Pennsylvania Turnpike. More subtly, the Great Depression was a good time for starting a small business because 

(1) many people had no viable alternatives
(2) labor was cheap and reliable
(3) real estate was cheap
(4) raw materials and inventories were cheap -- fire-sale prices without the smell of smoke
(5) customer loyalty was a reality.

There was no easy money. The 1920's dangled the prospect of getting rich quick by investing in speculative activities instead of in job-creating plant and equipment. In the 1930's just about everyone recognized how precarious life could be when the economy melted down, and if one ran a grocery store and hired someone not in one's own family as a clerk one could reasonably expect the extended family of that clerk to be reliable customers.  Do you see that today? Of course not. 

I might as well remind you -- about ten years after the Great Stock Market Crash of 1929, things were better for most Americans than then in material terms -- more cars, radios, telephones, and appliances; more people were on the electric grid. Industrial wages were higher because of strong unions. America was growing its way out of a nasty economic meltdown. The good times of the following 1T had portents in the late 1930's. Of course something would get in the way: the aggression of the demonic Axis powers would transform the consumer society into a war economy. 

.......

I may have more optimism about the resilience of human nature than you have. A 4T compels people to adapt because of the prospect of ruin or mass death. COVID-19 is killing like a mismanaged war. Yes, Donald Trump is a horrible leader, the near-antithesis of the most admired Crisis-era leaders of all time (Lincoln, FDR, Churchill)... but just look at him as a proposition of everything wrong. He sees himself as a repudiation of Barack Obama, who ironically has most of the characteristics of of a great leader in a Crisis. Oh, Obama could not convince people who were his political antithesis to go along with him? Maybe the problem was with his political antitheses, the American economic elites who believe that everyone else owes everything to those elites and must suffer so that 'we' can enjoy the benefit of an economic order as inequitable as a plantation in the ante-bellum South. The Republican Party now melds the heritage of the plantation with the managerial ethos in commerce and industry of the vile boss Henry Clay Frick. 

Of course we do not put back together the shattered glass that we dropped on the tile floor. We sweep it up and discard the shreds of a glass that could be put together again only by melting it down and forging it anew as another glass. Or, as most of us do, we go to the store and get another glass or get one out of storage that we bought earlier. 

I am tempted to believe that, unlike the meltdown that led to the Great Depression, this one is the result of a horrible medical crisis that will itself pass -- after killing who knows how many Americans. People still believe in the consumer economy and, as soon as participating in such is safe again, people will. We are going to change our ways. Maybe we will need appointments to go to the bank or the car dealership for a few months. We will order stuff on line only to pick it up at the store instead of getting to see the merchandise for ourselves. This will make buying something like high-fidelity equipment tricky because a $2000 set of stereo speakers and a $200 set of stereo speakers can look much alike. If you have the funds and the ear you might be able to tell that the difference of $1800 can be well worth it.  But -- you must first hear the difference. Likewise, a $200 men's suit can look much like a $2000 men's suit...

That's not to say that we don't have some underlying problems to resolve. The 2007-2009 meltdown had much the same cause and much the same severity as the first year and a half of the three-year economic meltdown beginning in the autumn of 1929. We basically went from the 1929 peak to the equivalent of early 1931, when the Obama Administration backed the financial sector. The problem? Once the entities deemed "too big to fail" got rescued, the economic elites had the means with which to lavish funds on politicians willing to do their bidding. That meant the politicians who most fully believe that no human suffering can ever be in excess so long as it turns, enhances, or enforces a profit for the economic elites. Maybe our elites didn't go so far as to sponsor the rise of an Adolf Hitler, but they certainly sponsored an anti-human, pseudo-populist ideology that manifests itself in Donald Trump.  

Technology will allow people to do fine dining again -- at a higher price. We are finding that the low prices in box stores come with a high price to workers here (who either lose their jobs or end up working in dangerous working conditions) and that a reliable supply and solid pay are both  more desirable than low prices. Much of what we consider prosperity depends upon mindless expenditures that many of us can give up without losing much. The 24/7 economy that we have come to take for granted probably is no more. Do you really need to go to Wal*Mart for cold cuts, bread, and beer at 2 AM?  We will adjust. Can we afford meat that costs less than vegetables but that requires conditions out of Upton Sinclair's The Jungle make them so cheap? The people who make that possible by working in such places are particularly vulnerable to COVID-19, and economic reality will stop that. Much of the profitability of the retail sector of brick-and-mortar stores depends upon impulse shopping in which people buy stuff that they do not need. If the stores are closed, then such is impossible. 

Many of us are finding out what we most cherish and what we can do without. We are all deep into the stage of diminishing returns for happiness through consumerism. As people working at home have discovered, we may not need to live in New York City to work for an entity in New York City. Getting NYC pay while living in low-cost Scranton, Pennsylvania might be the best of both worlds for many.

[Eric the Green]

(05-28-2020, 10:35 AM)Mickey123 Wrote: The unemployment rate in the U.S. is now at its highest level since the Great Depression.  It's somewhere in the neighborhood of 25% by this point.

And there is no end in sight for any of this.  Nothing can return to normal while the virus still spreads, and it isn't going to stop until we have a vaccine, which is 6 months or a year or two away (or possibly even never).  By the time the virus is behind us and we can try to return to normal, we're going to find that we can't.

It's easy to drop a glass on the floor and shatter it, and vastly more difficult to somehow put all the pieces back together.  Once you have enough people out of work, and enough people who've lost confidence in the economy and who have stopped spending and are saving everything, how do you reverse this?  People aren't spending, businesses aren't hiring because they don't have the sales to support new hires, large numbers of people are out of work and have no jobs they could possibly get.  With so many people not working and not producing anything, society is much poorer than it was.

The government, which is tasked with fixing all this, is much poorer than it was, as its tax revenue is considerably lower than it once was.  It doesn't have the money to just hire 25% of the population and pay them all to do who knows what.

The last Great Depression didn't end until World War II.  When will this one end?

Bernie was right; unless we realize that we need to tax and spend again, the government won't be able to hire 300,000 contact tracers and test-givers, and infrastructure building and other enterprises that are not geared toward marketing for a profit. I doubt, given how easily the boomer Democrats deserted Bernie, that we are willing to see the need for this yet. The only other way to finance a recovery is for the USA to give out gobs more loans, and hope enough people will buy bonds.

My prediction continues to be that, one way or another, the early 20s will see an uptick of needed reforms, and this will swell toward more drastic changes (and resistance to them) as the crisis climaxes in the late 20s. But victory will come much more easily than in the 1860s. And there will be foreign trouble to deal with at the same time. Lots of irons on the fire. But since reforms and changes will be made to rein in the market system, reinstate taxes and regulations on the wealthy and corporate powers, subsidize the new green energy systems that we need, and institute democratic reforms that are so needed, I think boom times could actually return by 2023 or 24 (or more pessimistically 2025, depending of course on how soon the loony Republicans are expelled from power).

[pbrower2a]

(05-28-2020, 01:50 PM)Bob Butler 54 Wrote: It won’t end.  The turnings don’t travel backwards.  The new society adapted to solve the crisis problem becomes the new normal.

Real progress demands the resolution of the current Crisis, one that will not simply fade away. Good leaders would attack the root causes of economic distress and our vulnerability to such a menace as COVID-19 that has exploited the vice of seeking to live large on the cheap. Like cheap meat that depends upon people working under conditions that make them too sick to work? That is over. 

Quote:I have long thought we were too addicted to luxuries.  While the New Deal adjusted the retirement age and the work week expectation, the numbers that they settled on became fixed and unchangeable since.  In order for the elites to eke out maximum profits, they created in part though advertising a society that was hooked on material things they didn’t need.

Many of us are finding out that we can live without many of the things that we used to buy with little thought. The shutdown will last long enough to break some habits (as opposed to some economic realities). 

Quote:The virus is giving us a chance to rethink that.  Suddenly, the older folks shouldn’t be in the workplace, and we find no need to buy certain things.  Productivity has increased, so we don’t need to put so many hours in.  Resources are becoming more expensive.  If we still want to use labor to distribute wealth, start by dividing the amount of labor needed by the number of laborers.  Don’t worship old numbers.

Older people might still like to work -- but many of them can work remotely, especially if their work is mental in character. "Make it do or do without " is one Crisis Era solution to an economy dedicated to defeating the Axis powers. It can also serve to reduce emission of greenhouse-gases. I have seen some projections of global warming... and if you think the previous Crisis was nasty, just think of what happens when a huge part of the world's best croplands are inundated, and when agricultural (let alone ecological) zones cannot move fast enough   

Quote:If we have 25% unemployment, can you just drop the amount of labor expected by 25%?  Or do you have some thing about providing the elites with absurd wealth?

If it takes thirty hours to produce what we used to produce in forty, and we don't need so much stuff, then that will be what we need to do.  

Quote:Stop dreaming about going backwards.

The Third Turning, with its supply-side ideology, the speculative bubbles, the under-investment in plant and equipment, the treatment of 'luxury' as a virtue, the celebrity circus (of which Donald Trump was a part), and the stratospheric rewards to bureaucratic elites got us into this mess. So you just totaled your car because you were driving drunk -- what are you going to do? Get drunk again?  

I am tempted to believe that Americans are going to use Donald Trump as a scapegoat  and an excuse for doing everything differently.

[David Horn]

(05-28-2020, 01:50 PM)Bob Butler 54 Wrote: It won’t end.  The turnings don’t travel backwards.  The new society adapted to solve the crisis problem becomes the new normal.

I have long thought we were too addicted to luxuries.  While the New Deal adjusted the retirement age and the work week expectation, the numbers that they settled on became fixed and unchangeable since.  In order for the elites to eek out maximum profits, they created in part though advertising a society that was hooked on material things they didn’t need.

The virus is giving us a chance to rethink that.  Suddenly, the older folks shouldn’t be in the workplace, and we find no need to buy certain things.  Productivity has increased, so we don’t need to put so many hours in.  Resources are becoming more expensive.  If we still want to use labor to distribute wealth, start by dividing the amount of labor needed by the number of laborers.  Don’t worship old numbers.

If we have 25% unemployment, can you just drop the amount of labor expected by 25%?  Or do you have some thing about providing the elites with absurd wealth?

Stop dreaming about going backwards.

I agree.  An adjustment must be made, because the alternative is chaos.  Of course, when that occurs and what form it takes is why we're in the midst of a 4T with no idea how to complete the tasks needed to move on.  Eventually we will, though I don't expect to see a lot of it myself.  If the 1T arrives in 2030, it will be 2040 before the New Normal is fully defined. I'll be 93 ... assuming I'm still here.

[User3451]

(05-28-2020, 04:35 PM)pbrower2a Wrote:

(05-28-2020, 10:35 AM)Mickey123 Wrote: The unemployment rate in the U.S. is now at its highest level since the Great Depression.  It's somewhere in the neighborhood of 25% by this point.

And there is no end in sight for any of this.  Nothing can return to normal while the virus still spreads, and it isn't going to stop until we have a vaccine, which is 6 months or a year or two away (or possibly even never).  By the time the virus is behind us and we can try to return to normal, we're going to find that we can't.

It's easy to drop a glass on the floor and shatter it, and vastly more difficult to somehow put all the pieces back together.  Once you have enough people out of work, and enough people who've lost confidence in the economy and who have stopped spending and are saving everything, how do you reverse this?  People aren't spending, businesses aren't hiring because they don't have the sales to support new hires, large numbers of people are out of work and have no jobs they could possibly get.  With so many people not working and not producing anything, society is much poorer than it was.

The government, which is tasked with fixing all this, is much poorer than it was, as its tax revenue is considerably lower than it once was.  It doesn't have the money to just hire 25% of the population and pay them all to do who knows what.

The last Great Depression didn't end until World War II.  When will this one end?

The Great Depression was a severe meltdown followed by slow growth out of it. Government played its role in big projects that hired large numbers of construction workers who would otherwise have been out of work. The 1930's were the time of Boulder Dam, the Tennessee Valley Authority, the building of such bridges as the George Washington Bridge and the Golden Gate Bridge, and some of the first American expressways (the Pasadena Freeway and the Ramona Parkway (the latter now part of the course of the San Bernardino Freeway in Greater Los Angeles) and just before the start of World War II the Detroit Industrial Freeway, the divided US 66 (some of it up to modern freeway standards) between Chicago and St. Louis, and the original section of the Pennsylvania Turnpike. More subtly, the Great Depression was a good time for starting a small business because 

(1) many people had no viable alternatives
(2) labor was cheap and reliable
(3) real estate was cheap
(4) raw materials and inventories were cheap -- fire-sale prices without the smell of smoke
(5) customer loyalty was a reality.

There was no easy money. The 1920's dangled the prospect of getting rich quick by investing in speculative activities instead of in job-creating plant and equipment. In the 1930's just about everyone recognized how precarious life could be when the economy melted down, and if one ran a grocery store and hired someone not in one's own family as a clerk one could reasonably expect the extended family of that clerk to be reliable customers.  Do you see that today? Of course not. 

I might as well remind you -- about ten years after the Great Stock Market Crash of 1929, things were better for most Americans than then in material terms -- more cars, radios, telephones, and appliances; more people were on the electric grid. Industrial wages were higher because of strong unions. America was growing its way out of a nasty economic meltdown. The good times of the following 1T had portents in the late 1930's. Of course something would get in the way: the aggression of the demonic Axis powers would transform the consumer society into a war economy. 

.......

I may have more optimism about the resilience of human nature than you have. A 4T compels people to adapt because of the prospect of ruin or mass death. COVID-19 is killing like a mismanaged war. Yes, Donald Trump is a horrible leader, the near-antithesis of the most admired Crisis-era leaders of all time (Lincoln, FDR, Churchill)... but just look at him as a proposition of everything wrong. He sees himself as a repudiation of Barack Obama, who ironically has most of the characteristics of of a great leader in a Crisis. Oh, Obama could not convince people who were his political antithesis to go along with him? Maybe the problem was with his political antitheses, the American economic elites who believe that everyone else owes everything to those elites and must suffer so that 'we' can enjoy the benefit of an economic order as inequitable as a plantation in the ante-bellum South. The Republican Party now melds the heritage of the plantation with the managerial ethos in commerce and industry of the vile boss Henry Clay Frick. 

Of course we do not put back together the shattered glass that we dropped on the tile floor. We sweep it up and discard the shreds of a glass that could be put together again only by melting it down and forging it anew as another glass. Or, as most of us do, we go to the store and get another glass or get one out of storage that we bought earlier. 

I am tempted to believe that, unlike the meltdown that led to the Great Depression, this one is the result of a horrible medical crisis that will itself pass -- after killing who knows how many Americans. People still believe in the consumer economy and, as soon as participating in such is safe again, people will. We are going to change our ways. Maybe we will need appointments to go to the bank or the car dealership for a few months. We will order stuff on line only to pick it up at the store instead of getting to see the merchandise for ourselves. This will make buying something like high-fidelity equipment tricky because a $2000 set of stereo speakers and a $200 set of stereo speakers can look much alike. If you have the funds and the ear you might be able to tell that the difference of $1800 can be well worth it.  But -- you must first hear the difference. Likewise, a $200 men's suit can look much like a $2000 men's suit...

That's not to say that we don't have some underlying problems to resolve. The 2007-2009 meltdown had much the same cause and much the same severity as the first year and a half of the three-year economic meltdown beginning in the autumn of 1929. We basically went from the 1929 peak to the equivalent of early 1931, when the Obama Administration backed the financial sector. The problem? Once the entities deemed "too big to fail" got rescued, the economic elites had the means with which to lavish funds on politicians willing to do their bidding. That meant the politicians who most fully believe that no human suffering can ever be in excess so long as it turns, enhances, or enforces a profit for the economic elites. Maybe our elites didn't go so far as to sponsor the rise of an Adolf Hitler, but they certainly sponsored an anti-human, pseudo-populist ideology that manifests itself in Donald Trump.  

Technology will allow people to do fine dining again -- at a higher price. We are finding that the low prices in box stores come with a high price to workers here (who either lose their jobs or end up working in dangerous working conditions) and that a reliable supply and solid pay are both  more desirable than low prices. Much of what we consider prosperity depends upon mindless expenditures that many of us can give up without losing much. The 24/7 economy that we have come to take for granted probably is no more. Do you really need to go to Wal*Mart for cold cuts, bread, and beer at 2 AM?  We will adjust. Can we afford meat that costs less than vegetables but that requires conditions out of Upton Sinclair's The Jungle make them so cheap? The people who make that possible by working in such places are particularly vulnerable to COVID-19, and economic reality will stop that. Much of the profitability of the retail sector of brick-and-mortar stores depends upon impulse shopping in which people buy stuff that they do not need. If the stores are closed, then such is impossible. 

Many of us are finding out what we most cherish and what we can do without. We are all deep into the stage of diminishing returns for happiness through consumerism. As people working at home have discovered, we may not need to live in New York City to work for an entity in New York City. Getting NYC pay while living in low-cost Scranton, Pennsylvania might be the best of both worlds for many.

The virus is uncovering all the underlying problems in the US. You're correct, the pandemic will pass, but the underlying problems will remain until we create solutions to deal with them.

The underlying problem has little to do with consumerism, although there is a connection between consumerism and the unjust world we live in. The significant underlying problems have to do with inequality. Economic, racial, etc.

Can we really live in a democracy when most people have no power? 

Trump is obviously not equipped to create solutions to these problems, but it's also clear that people like DiBlasio are not either. 

Bernie has solutions, he is one of the "gray champions" but it remains to be seen who the others will be. That's the big question, will we see people like Bernie gain politcal traction. And I don't think that necessarily means keeping Bernie's politics, it just means leaders standing up for making changes to our system so that it works more fairly for everyone.

[beechnut79]

One poster on this thread mentioned things from the last 1T I do believe. You don’t really think the whole Organization Man/Suzy Homemaker lifestyle commonplace during the last 1T to come back into vogue, do you? Where the former is concerned, with such vast increases in both technology and global competition there is no way any organization could nearly guarantee a worker 30 or so years of service. It’s really a marvel that they could do it then. Where the latter is concerned, today’s womanhood nearly without exception is much more educated and ambitious and those with advanced degrees in particular would be bored to tears living in that fashion. I just can’t see them willing to put up with it.

[David Horn]

(05-30-2020, 02:42 PM)beechnut79 Wrote: One poster on this thread mentioned things from the last 1T I do believe.  You don’t really think the whole Organization Man/Suzy Homemaker lifestyle commonplace during the last 1T to come back into vogue, do you?  Where the former is concerned, with such vast increases in both technology and global competition there is no way any organization could nearly guarantee a worker 30 or so years of service. It’s really a marvel that they could do it then.  Where the latter is concerned, today’s womanhood nearly without exception is much more educated and ambitious and those with advanced degrees in particular would be bored to tears living in that fashion.  I just can’t see them willing to put up with it.

Cycles repeat, but not as replays. I expect this 1T will be energetic and focused on fixing a lot of broken things, but it won't be a literal repetition of the last1T by a long shot.  For one thing, women are now fully engaged, if not fully equal in social terms. The same applies to racial and ethnic minorities.  I don't see these issues just moving to the backburner for a few decades. This will preclude any return to rigid social status definitions.

[beechnut79]

And yet a lit of social issues did move to the back burner during the four decades since Reagan. Isn't a 4T comparable to going through one's closet to discard what is no longer needed?

[David Horn]

(05-30-2020, 07:59 PM)beechnut79 Wrote: And yet a lit of social issues did move to the back burner during the four decades since Reagan. Isn't a 4T comparable to going through one's closet to discard what is no longer needed?

Actually, it's about dumping what's toxic and nourishing what's beneficial.  We're not really there yet, but we're finding the toxic stuff and looking for the good.

[Bob Butler 54]

(05-31-2020, 10:02 AM)David Horn Wrote:

(05-30-2020, 07:59 PM)beechnut79 Wrote: And yet a lit of social issues did move to the back burner during the four decades since Reagan. Isn't a 4T comparable to going through one's closet to discard what is no longer needed?

Actually, it's about dumping what's toxic and nourishing what's beneficial.  We're not really there yet, but we're finding the toxic stuff and looking for the good.

I suspect that the bug will get Biden in, and the rest of the blue agenda follows. We'll see what happens.