Every day's paper brings more Harbingers of Doom. And there are more to come. That's the message from Congress, the White House, various pundits and the ever-talking heads on television. Budget cuts at work, economies at home, the signs are everywhere. We seem to have entered the Age of Eeyore.
You can hear the gloom in the bluesy lyrics of R and B and country music, perhaps the best barometer of what Americans are feeling. (Since this recession I'm losing my baby,/ because the times are getting so hard.... --B. B. King.)
You can see the gloom in your last quarter's 401(k), read it in the news pages ("Tumbling stocks end a bleak week"), and absorb the intellectualized version of it in The New Yorker. That style-setting magazine just conducted a full-range survey of professional pessimists. Take your pick: doomers, peakists, goldbugs, dystopians in general....
All 57 varieties of the downcast are reveling in the bad news. After predicting The Great Unraveling for years, maybe decades, their hour has come. Everything's down but the price of gold, which is always the surest sign that folks are running for the exits.
Soon the hottest, latest investment advice will be to buy mattresses -- to stick your money under. We're no longer being warned that The End Is Near but that it's here.
This new, young, vibrant president of the United States keeps talking like a pallbearer. He uses terms like Catastrophic and Unprecedented. As if we're supposed to be scared into prosperity, or at least into passing another bailout for Detroit. He tells us we're facing economic conditions unknown since the Great Depression, or maybe the Beginning of Time: "We begin this year and this administration in the midst of an unprecedented crisis that calls for unprecedented action."
Unprecedented? In history? That's all history is: precedents. We may choose to rely on the wrong ones, but after all homo economicus has been through, precedents we've got. Take your pick: The stock market crash of '87, aka Black Monday. The Reagan Recession of '81-82. The Roosevelt Recession of 1937. The Panics of '07 or 1893 or even 1873. Or the long-running bust that followed in Andy Jackson's wake in 1837. Or the New Madrid of economic shocks in 1819. ... Pick your collapse.
And your remedy. There's a full menu to choose from just in the history of the New Deal, both the early and later. This president seems to pick one from List A and two from List B every day, whether they go together or not. One day he's going to spend $787 billion to stimulate the economy, or at least political patronage, and the next he's going to balance the budget. Eventually. Like the man who's going to go on a diet as soon as he gets his weight under control.
On List A are the New Deal's precedents to beware: The price-fixing NRA, FDR's decision to pull the rug out from the London Economic Conference and international cooperation in general, and his raising taxes on capital late in the 1930s, which sent the economy reeling back into the Depression. Class warfare won, the country lost.
All these bad moves have their equivalents today: the labor unions' card-check program to deny American workers the right to vote on whether to unionize; the stimulus package's Buy American clause, and this president's proposal to raise taxes on the filthy rich lest they continue to employ so many of us.This isn't sound policy; it's demagoguery. It didn't work in 1936 and it's just as likely not to work in 2009. We learn from history that we learn very little from history.
But various parts of the New Deal have stood the test of time. Its successful innovations could still show us a way out of the current slump. For example, the FDIC, CCC, WPA, Social Security, and the HOLC -- the Home Owners Loan Corporation that refinanced the housing market.
And there's no overestimating the happy effect of FDR's buoyant confidence. The only thing we had to fear, he told us, was fear itself. But a happy warrior this president isn't. He hasn't hesitated to use fear for political purposes. It's a way to scare people into passing his program. Which may be good politics, but it's scarcely good policy.
It's one thing for a president to feed hysteria, but it's pretty bad when a supposedly objective wire service like The Associated Press plays the same game. To quote an AP dispatch that appeared in the paper as straight news the other day (February 16, 2009) -- "Passage of the stimulus measure -- unprecedented in its cost -- was a triumph for Obama as he struggles to lift the country from a financial nosedive unseen since the Great Depression of the 1930s."
Unseen since the Great Depression. A little perspective, please. To restore it, just look around. Does this country look like those Walker Evans photographs of the utterly depressed Thirties?
Let's look at the numbers: In 2008, the American economy lost 3.4 million jobs. Painful. That's 2.2 percent of the labor force.
But from November of '81 to October of '82, 2.4 million jobs were lost -- a smaller number but just as great a percentage of the smaller labor force back then: 2.2 percent.
The unemployment rate last month (7.6 percent) was far below its peak in 1982: 10.8 percent. That's when the groundwork was being laid, thanks to dramatic tax cuts, for the Reagan Recovery, one of the longest-running booms in American history.
Comparisons to the 1930s are even less realistic. In the early '30s, jobs were being lost at triple today's rate. By the time FDR was inaugurated in 1933, a quarter of the country was jobless. Over 10,000 banks would fail that year compared to a couple of dozen last year. That number can't even compare to the more than 3,000 lost in the savings-and-loans debacle of 1987-88.
Maybe my lonely optimism is some kind of genetic defect. Or at least an acquired characteristic. I can remember my father recounting all the businesses he'd failed at in his younger days. A grocery store (just keeping inventory drove him crazy) and a laundry (he was stinkbombed out of business when he declined to pay protection money in Al Capone's Chicago), and even a restaurant (he loved being a host but couldn't take the hours).
But if he was broke from time to time, he was never poor, which can be more a state of mind than a balance sheet. Ben Greenberg may not have known what an entrepreneur was, given his third-grade education and immigrant-boy background, but he was one. After a childhood of privation in Poland, he never even noticed the Depression in this country. A congenital optimist, he was about the most American character I've ever known. If he failed at one pursuit, and he did at more than one, he'd succeed at another. Something would turn up. And it always did. Maybe because he was always looking for one. He couldn't pass a piece of land or an abandoned house without wondering if it was a good buy.
It's not as if life comes with any kind of guarantee; it's a gamble from conception. It's also a marvel. I wouldn't give up on America so fast. The economy will boom again, and then bust again. It's called the business cycle. Something will turn up. And when it does, a lot of folks who've just lost their job may look back on having to find another, or maybe a whole different line of work, as the best thing that ever happened to them.