I just began my two week unit on the Great Depression. How to teach it without ignoring the obvious contemporary parallels? I had a student crying this afternoon when we made the connections between 1929 and 2008. The accounts of anger, fear, pain, loss and helplessness are the stories I always wish to impart, along with the attempts to shore up and reform the economic system that so blindly allowed such wreckless behavior to occur. That said, I find it all too frustrating to read the most recent editorial by my favorite, Victor Davis Hanson. Late last week, Hanson's piece, "A Funny Sort of Depression" appeared in the Chronicle (another institution that hospice has been called for), sneering at those terrified of the economic debacle the nation and world faces. His article states that the economic downturn is nothing like 1932, the government needs not to act and that we as Americans, while facing hard times, really aren't doing that badly. As evidence:
1. A 7% national unemployment rate.
2. Plunging oil prices have hurt our biggest international enemies.
3. Plunging energy costs give us money to spend on other essentials.
4. Plunging prices creates greater purchasing power.
5. Most aren't pulling out of the stock market.
6. It's easy to walk from a mortgage without facing repercussions.
7. Social programs allow for quite a parachute for those that fall down.
Thank God, Hanson, that the downturn has stopped and, according to your good word, has decided to stop there. While I'm not hoping for these predictors, as a student (and hopefully decent teacher) of history, here's what I know:
1. The unemployment rate did nothing but grow for four solid years AFTER the stock market crash, which, like the financials disaster, was not the catalyst of anything but the straw that broke the camel's back in 1929. With little government action, millions of Americans watched their jobs simply vanish. The financial crisis only hit six months ago.
2. Oil prices mean nothing if Americans stop pumping gas into their cars due to a lack of funds. Americans aren't buying gas because it's expensive; when Chris and Steve see gas higher than I do, there's a sign that something's amiss. We're rationing not for the environment but for our own good. As for Russia, it seems to be doing just fine monopolizing oil flow into Eastern Europe. Chavez will suffer for his own foolish policies in Venezuela and as for the Middle East, I think demand in places like the U.A.E. will keep things rolling just fine.
3-4. Americans aren't spending because we're beginning to get scared of a greater, more perfect storm. Our mortgages are beginning to kill us, health care costs continue to rise (I now have a $15 co-pay through Kaiser and I'm supposed to have good insurance? When my wife takes the twins in for a check-up, I'm $30 poorer; my co-pay will be $20 in July. Just what will change in coverage between now and summer? Especially in the Bay Area, Americans are slowing down their spending as they're not sure whether they'll be employed in six months. Thankfully, I will be. Whether my wife will be is another story.
5. Thank God Hanson doesn't teach economics. Of course, no one's pulling out of the market. What sort of moron would pull out and lose absolutely everything he or she's put in these last several years? We're hoping that our shares increase in value with the shoring up of the credit and banking industries and for people to begin spending again. If I've invested several thousand dollars, pulling out now is simply a poor business decision. The market can continue to plummet as it did today (below 7,000!) but if I pulled out, it would be like setting my assets on fire. Why don't I smash the windows out of my living room just because I haven't repainted in five years?
6. Hanson hasn't shown that he's understood the historical trends of the last seventy-five years. The percentage of Americans that owned their homes in the 1930s was barely 40%. That's nearly 25% less than today's home ownership numbers. More people own their homes. That means that more people face losing their primary dwelling and greatest financial asset. If I lose my home that I'm renting, regardless of whether my landlord is fiscally solvent, I can find somewhere else to live without losing equity. If I lose the home I own, it's a double whammy. I'm out of a place to live and I've lost several hundred thousands of dollars worth of my adult savings. For a greater percentage of Americans, the thought of losing their homes also serves as a fatally flawed real estate market; what would banks and lenders do with hundreds of thousands of empty homes that they held notes for? How could they maintain them and maintain their market value? How could they be able to sell them if more Americans lost their homes and credit ratings only to not qualify for the chance to buy a home in the future? How could local and municipal law enforcement agencies enforce the protection of private property if houses sat vacant and exposed? "Just walk", Hanson says; it's easy to do so. The sheer volume of incidents point to a greater crisis than a single family's credit scores dropping below 600. If half of Americans lost their houses in the next three years, the banks holding the notes would collapse under the weight of valueless real estate.
7. Thank God for social programs to serve as a parachute for those that fall. However, we still see a Republican Party hell-bent on assisting no one and pushing for further tax cuts as the panacea to the nation's ills. Those of us who are still able to maintain our lifestyles must see to it that we help those in need. If we don't, we only sink deeper as a community into the hole. The vicious cycle could eventually suck us in and it will be then and only then that we scream for help. Here in California, we'd rather bicker over who wins instead of helping everyone and the state succeed. For those who gripe that life is much better than in the past that we should be thankful for what we have, we still must all remember that we're struggling as it is to maintain our super power status. Not for the next six months but for the next decade and generation. Our schools are failing as is; our infrastruture is collapsing as is; our systems are weakening as is and for the last decade, our national leadership has failed us in guiding us through to investing what is best for America and not just certain political bases. We need a renewed guidance that makes us see that our sacrifices will serve a greater purpose; that to make an omelet, sometimes eggs must be broken and for future generations to see us contributing to make a greater nation and not maintain the same smug self-serving selfishness that those with the greatest spending and speaking power have shown this millenium.
Labels: depression, New Deal, Obama, Victor Davis Hanson
