although 2009 could have seen a repeat of 1929-33 and it did not happen, there are no grounds for complacency. As the chart below illustrates, on current forecasts the economy will have performed as badly over the 2007-18 period as it did over the Depression period from 1929-40.
So we avoided another Great Depression, except that we didn’t. On a charitable interpretation, these sentences are not directly contradictory. The good news is that the economy performed better from 2007-2011 than it did from 1929-1933. The bad news is that it seems on track to perform worse from 2012-2018 than from 1934-1940, so that for the periods as a whole we came out the same.
I would suggest looking at both long periods from a PSST perspective. The Great Depression represented a failure to come up with new patterns of specialization and trade to deal with workers with 8th-grade educations, including farm laborers displaced by tractors and factory workers displaced by electric motors. The recent period represents a failure to come up with new patterns of specialization and trade for workers displaced by Chinese labor and computers.
“The recent period represents a failure to come up with new patterns of specialization and trade for workers displaced by Chinese labor and computers.”
According to our glorious bipartisan political/corporate establishment and their libertarian cheerleaders, this best thing we can do for these displaced workers is . . . to import millions more unskilled workers from the Third World!
No wonder many people are turning to Trump. He’s not going to help them, but at least he offers his voters the opportunity to flip the bird at a ruling class that has betrayed them.
…and according to protectionists, we could all live a middle income lifestyle with an 8th grade education if not for all this free movement of goods and labor. 😀
It seems reasonable we could do as well as the white parts of Europe. Or alternatively as well as places like Japan do. It’s not crazy to look at actual existing societies and ask why not us. They exist in 2016 despite all these trends and forces that are suppose to make middle class living impossible.
I have to inform Bernie Sanders supporters that Europe is not punching in our weight class, et tu?
Japan is just ridiculous. I don’t know that part of the cause is their insular society, but they have an insular society and the results the achieve are kind of embarrassing.
Apparently, you think the problems of your fellow Americans are a big joke. I don’t.
But if you have some brilliant theory about how importing millions of unskilled workers is helping a society where millions of citizens, including people with considerably more than 8th grade educations, are being displaced from their jobs, please let us know. I’m betting, though, that you just don’t care.
I very much hope whatever job you do is outsourced to India.
The good news is that the economy performed better from 2007-2011 than it did from 1929-1933. The bad news is that it seems on track to perform worse from 2012-2018 than from 1934-1940, so that for the periods as a whole we came out the same.
Well that sounds like a fair trade and it sounds like the fair comparison is 1929 – 1940 to 2007 – 2018!!! Why do economist not get bothered by 25% unemployment? For all the Tyler rants against Trump, the obvious blame is wages have been stagnant for 15 years and most blue collar skilled positions have had stagnant wages for 40+ years. My father-in-law said things were better 10 – 15 years ago, but I said 10+ years ago we had everybody focused on working harder for a higher monthly house payment.
The one aspect of the slower growth is the slowdown working population. If you controlled for population was 1934 – 1940 higher? Even if it was I bet if you expand to 1929 – 1940 the growth difference is substantial.
Just from a stability of the system perspective, I’d almost always favor spreading the down turn out. Highly concentrated economic pain seems far less favorable/far more risky.
Let us not forget, making certain jobs illegal (minimum wage) and making labor more expensive (regulation) probably doesn’t help one complete with or make adjustments to computer technology and Chinese workers.
Here is the real problem- time. Project the current environment out another 10-20 years- the compounding growth lost is simply enormous. At least 1940 was an ending point for the Great Depression (though I actually put that point at 1945 for perfectly rational reasons)
Oh, you don’t believe it can’t happen? People thought the same damned thing about Japan in 1997.
What continues to annoy about the mainstream economics profession, as embodied completely by Larry Summers, is that they never question whether or not today wasn’t caused by the response taken in 2008-09. Nor do they ever really question whether or not 1934-1940 was caused by the responses initiated first by Hoover and then expanded on by Roosevelt.
My prediction is this- a decade from now the economy of the developed world will be exactly the same size or smaller than today.
“whether or not today wasn’t caused by the response taken in 2008-09”
I wonder if today isn’t caused by the responses taken tomorrow!
For example, in the immortal words of Norm McDonald “Germany, for the second time, took on THE WORLD…and it was close.”
Did we really know in 1930 that the world wouldn’t be some form of global communism or global fascism?
As with “shadow banking” this crowd says these things all the time. Am I missing whatever is supposed to be commonly understood that excuses the absence of any evidence? Because it sounds like total BS to me, but they keep saying it signaling no awareness that it sounds like BS.
When income distribution becomes so tilted towards capital and wealth, we are indeed heavily dependent on them to pursue new investments even though they have little inducement to do so as it only imperils their existing share, but eventually they accept risks are not so great as they feared and a smaller share of a larger pie is a worthwhile trade off.