Wednesday, May 02, 2012


"Bush=Hoover; Obama=FDR. Simple."

We're in one. Depression, that is, at least according to Paul Krugman. He argues this because he says the data points toward a sustained extreme economic drop off, and that the Great Depression had its ups and downs - recession and recovery - but stayed down overall. To be fair, some of the numbers aren't as awful as they were then. Unemployment, at least if you count it the same as back in the Great Depression, is about the same as many years, but it got much worse back then. And we haven't seen the massive deflation in prices that hurt businesses so much.

The thing is, I think that's the wrong way to look at it. Think of things this way: if you have a bad head cold and you take some medicine so you feel better, has your cold gone away? Of course not, you still are sick, you still are suffering from the illness, you just have reduced the force of your symptoms. That's what anti-depressives do, they reduce the symptoms of depression, but not the actual problem.

And that's the problem with looking at individual statistics. Those are symptoms of economic down times, not the cause or statement of them. Yes, they typically are associated with downturns, but we've got a different situation today than in the 30s. Most of the severe economic pain that was caused then has been allayed by various mechanisms such as bank rules, FDIC, government programs, and so on.

You cannot simply empty out a bank and ruin it today, for example. Deflation and inflation are partly controlled by the Federal Reserve. Regulations on business and finance prevent some of the more ghastly mistakes and panicked decisions. The Stock Market can crash incredibly fast but not destroy the economy.

In other words, most of the symptoms of a depression have been alleviated or reduced, but the actual economic situation is still there. That's why the new jobs aren't out there, why inflation keeps creeping up on key sectors of the economy (which conveniently aren't considered in official inflation reports), why people feel like the economy is miserable when it isn't, and why growth is so anemic and sporatic, if it even takes place. We're at the bottom of the barrel.

And if a Republican were president we'd have been told this dozens of times before. And they'd be right.

*Hat tip Hot Air for the Krugman story.


Anonymous said...

Another symptom of the Great Depression that has been alleviated is a fall in personal standards of living. Thanks to food stamps, welfare payments, Medicaid, aid to Women and Infant Children, and a host of other government and charitable programs, few people are actually starving or living on the street. If they were, we would see their pictures on the news every night, with relentless reports blaming all that suffering on the Republicans.

Yes, there are people in homeless shelters and people who eat at soup kitchens and people who lost their homes, but there are always some people who are down and out whether the nation has good times or bad. I have not seen the media provide evidence that people are personally suffering in the same degree or in the same numbers as they did during the Great Depression. Well, not since Obama took office (perhaps there's a cause-and-effect connection there?)

Food Network TV has been claiming that massive numbers of children in America are going hungry (25%, I think), but I have not seen them present evidence to support it. Surely these emaciated children would be appearing on TV every night as well, if the problem were as widespread as claimed. Christopher: Do you have any information on this presumed problem? I am most interested in learning the truth about this claim.

Christopher R Taylor said...

The starving kids bit comes from a few studies that demonstrated that young people are going without meals. The problem is one of definition; one study declared children to have a food problem (starving, is what the newspaper reported it as) if they missed more than five meals a month. By that standard I'm practically dead.

Anonymous said...

Thanks for your explanation, Christopher. From the way Food Network TV goes on about hungry children in America, it sounds like we're just a step or two away from being a starvation nation -- like Ethiopa, Haiti, and some other third world countries whose people are suffering serious adverse health effects due to malnutrition, including too many deaths due to starvation.
I wish the left had some sense of proportion and would put their "evidence" in context with standards elsewhere in the world as well as throughout modern history. As moms used to say to their little fussy eaters, there are millions of kids all over the world who would love to trade places with any American kid. And as my dad used to say, when my sisters and I moaned that we we staaarving, "You don't know what hungry is." He grew up in an orphanage in the Great Depression, and I am sure he had first-hand experience with hunger.