Posts Tagged ‘Great Depression’

American-Dream

The American Dream has been a prominent theme of our Tale of Two Depressions course this semester. We have had the opportunity to trace both the changing content and contours of that dream and the periods, as after 1929, when it quickly turned into a nightmare.

But, as we know, a new American Dream was invented in the postwar period, the so-called Golden Age of American capitalism, which—while unevenly distributed (for example, in the Jim Crow South and northern inner cities) and openly contested (for example, in the Port Huron Statement and the March on Washington for Jobs and Freedom)—held sway at least in some pockets. Such as Detroit:

Decades ago, car workers lived the quintessential American Dream: they pursued stable, well-paying, union-backed jobs, often straight out of high school. They were able to build a middle-class life and provide the promise of something better to their children.

Now, once again, as the BBC [ht: ja] explains, that dream has turned into a nightmare:

Times have changed.

Now jobs are scarce, and people feel shame in being unprepared for the current labour market.

“Unemployed auto workers, factory workers, they have a lot of regrets about the past,” he said.

“A lot of workers are internalising, ‘You succeed on your own merits and your own abilities, and if you fail, you’re to blame’,” [Victor Tan] Chen says.

He isn’t alone in seeing this pattern.

Experts tell the BBC that job seekers in the US are now, more than ever, blaming themselves for being out of work, due in part to misconceptions about what it takes to succeed in America.

What reinforces such an American Nightmare is a self-help industry that is the modern secular version of our grounding myth—which, as Helaine Olen explains, is “the idea that diligent efforts and thrift demonstrated both godliness and virtue — and would result in worldly success.” Belief in self-help easily becomes self-blame. And, of course, an attempt to blame the victims of the Second Great Depression for their own plight.

Viewed through this prism, you can think of the constant simmering anger in our culture as the road rage of self-help culture. Fearing the humiliation of failure, we aggressively lash out at others who prove the self-help nostrums a lie.

This could be the reason that many, including Republican members of Congress, blame the long-term jobless for their own plight, and cut off their unemployment checks. We say those who fell prey to predatory lending weren’t misled, but were greedy.

According to the tenets of self-help, the victims of the American economic collapse need not a helping hand, but a kick in the pants.

Bors-4-3-14

It just so happens, in the midst of the march to war over Ukraine, this week we’re teaching Berkeley in the Sixties and The Port Huron Statement in the Tale of Two Depressions course.

In 1962, the Students for a Democratic Society were concerned about the effects of “a half-century of accelerating destruction,” especially the policy of nuclear deterrence.

Deterrence advocates, all of them prepared at least to threaten mass extermination, advance arguments of several kinds. At one pole are the minority of open partisans of preventive war —who falsely assume the inevitability of violent conflict and assert the lunatic efficacy of striking the first blow, assuming that it will be easier to “recover” after thermonuclear war than to recover now from the grip of the Cold War. Somewhat more reluctant to advocate initiating a war, but perhaps more disturbing for their numbers within the Kennedy Administration, are the many advocates of the “counterforce” theory of aiming strategic nuclear weapons at military installations — though this might “save” more lives than a preventive war, it would require drastic, provocative and perhaps impossible social change to separate many cities from weapons sites, it would be impossible to ensure the immunity of cities after one or two counterforce nuclear “exchanges”, it would generate a perpetual arms race for less vulnerability and greater weapons power and mobility, it would make outer space a region subject to militarization, and accelerate the suspicions and arms build-ups which are incentives to precipitate nuclear action. Others would support fighting “limited wars” which use conventional (all but atomic) weapons, backed by deterrents so mighty that both sides would fear to use them — although underestimating the implications of numerous new atomic powers on the world stage, the extreme difficulty of anchoring international order with weapons of only transient invulnerability, the potential tendency for a “losing side” to push limited protracted fighting on the soil of underdeveloped countries. Still other deterrence artists propose limited, clearly defensive and retaliatory, nuclear capacity, always potent enough to deter an opponent’s aggressive designs — the best of deterrence stratagems, but inadequate when it rests on the equation of an arms “stalemate” with international stability.

As we know, history is repeating itself, as “the world alternatively drifts and plunges towards a terrible war when vision and change are required.”

Thus, we would do well to consider Stephen Cohen’s argument that the American media are misrepresenting Putin and Russia.

The degradation of mainstream American press coverage of Russia, a country still vital to US national security, has been under way for many years. If the recent tsunami of shamefully unprofessional and politically inflammatory articles in leading newspapers and magazines—particularly about the Sochi Olympics, Ukraine and, unfailingly, President Vladimir Putin—is an indication, this media malpractice is now pervasive and the new norm.

There are notable exceptions, but a general pattern has developed. Even in the venerable New York Times and Washington Post, news reports, editorials and commentaries no longer adhere rigorously to traditional journalistic standards, often failing to provide essential facts and context; to make a clear distinction between reporting and analysis; to require at least two different political or “expert” views on major developments; or to publish opposing opinions on their op-ed pages. As a result, American media on Russia today are less objective, less balanced, more conformist and scarcely less ideological than when they covered Soviet Russia during the Cold War.

And we should remember that Senator John McCain’s shameless denunciation of President Obama, as responsible for a “feckless foreign policy where nobody believes in America’s strength anymore,” was delivered in a speech the American Israel Public Affairs Committee (AIPAC), the most powerful foreign policy lobby in Washington. As John Hickman explains,

McCain fulminated about Russian annexation of Crimea and possibly of the Russian speaking eastern half of Ukraine. Yet he was speaking to an audience that had endorsed the annexation of the Golan Heights and East Jerusalem, and endorses the ongoing annexation of the West Bank. Hypocrisy more complete would be difficult to conceive.

American journalists allow politicians like McCain to get away with such nonsense because many fear reporting anything critical about either Israel or the Israeli lobby. They are also captives of the news frames constructed by official sources in Washington. For the Crimean Crisis the consensus news frame is that Russian behavior is a violation of a strong post Second World War international norm against territorial annexation. The historical reality is that the norm has been frequently and successfully violated: Poland annexed East Prussia, East Brandenburg, Lower Silesia, and Pomerania; Russia annexed Bessarabia and Bukovina; India annexed Goa, Daman and Diu, Dadra and Nagar Haveli; India and Pakistan partitioned Kashmir; Indonesia annexed West Irian; Ethiopia annexed Ogaden; Turkey annexed northern Cyprus; Morocco annexed Spanish Sahara, and Israel annexed the majority of Palestine. Yes, of course some sort of justification could be offered for each of these events. There are always justifications. What is important but ignored in the outrage currently being performed about Crimea is that “the world community” did not protest strongly or effectively.

The consensus news frame also excludes reference to the complexities of Russian and Soviet history. When reporters deploy the propagandistic phrased like “Ukraine’s Crimea” they ignore the fact that Russian sovereignty over the peninsula predates American possession of the Mississippi Valley and ignores the rather artificial transfer of sovereignty over the peninsula from Russia to Ukraine by Nikita Khrushchev, at a time when both Russia and Ukraine were part of the same country (the Soviet Union). Forget about sympathy for the difficulties faced by ethnic Russian minorities in the post-Soviet near abroad.

Between the irresponsible pandering of politicians and the cockeyed international news coverage it seems likely that many will be deceived by a simplistic narrative of Ukrainian nationalist good guys and Russian bad guys. What a pity that it always seems to take so long to realize we are being failed by our political and news media leaders.

In both cases, the march to war was prepared by simplistic narratives produced and disseminated by feckless media and politicians.

greed

Yesterday in our class on A Tale of Two Depressions, we discussed Robert McElvaine’s notion of “moral economy” (which he introduces in chapter 9 of his book, The Great Depression: America, 1929-1941). The idea is that, during the first Great Depression, Americans were engaged in an intense debate between different moral economies (which McElvaine characterizes as the difference between the “cooperative individualism” of workers and the “acquisitive individualism” of businesspeople).

As I explained to students, all economic theories—for example, neoclassical, Keynesian, and Marxian theories—represent moral economies. And they arrive at very different conclusions concerning the justice or fairness of capitalism. Thus, for example, neoclassical economists argue that everyone gets what they deserve and, through the workings of the invisible hand, the result will be full employment. In contrast, Keynesian economics is based on the proposition that, while everyone may get what they deserve (with the possible exception of coupon-clippers), it’s quite possible that will result in less-then-full-employment equilibrium, which then requires the visible hand of government intervention. Marxian economists propose a third possibility: even if everyone gets what they deserve in markets, in production things are different (because of exploitation)—and the consequence, whether there’s an invisible or visible hand, is inequality and instability. In other words, the three economic theories represent radically different moral economies.

One student then invoked the idea of moral economy and blamed greed for causing the current crisis. I responded by making the distinction between individual greed and economic institutions, which like the different notions of fairness among economic theories leads to quite different solutions: throw the greedy bankers in jail (which of course we haven’t done) or change the economic institutions (which we haven’t done either).

Chris Dillow makes a similar distinction between “greedy bankers” and “overly powerful bankers.” His view is that “the habit of over-emphasizing individuals’ traits and under-emphasizing situational forces” leads us to “to moralize inequality; the rich are rich because they are greedy whilst the poor are poor because they are lazy.”

What this effaces is the fact that inequalities in capitalism are instead the result of inequalities of power – a power which rests in part upon ideology. Moralizing inequality tends to blind us to this fact. It creates the illusion that capitalism would be acceptable if only those at the top were better people, when in fact the faults in capitalism are structural and not due to the flaws of passing individuals.

That’s pretty much the same distinction I was trying to make, although I still want to characterize the two explanations as different moral economies: one is a moral economy of flawed individuals, while the other is a moral economy of flawed institutions.*

 

*Although I’m willing to admit I’m sympathetic to Dillow’s view for another reason: because he invokes my favorite football club and blames Crystal Palace fans (who greeted Wayne Rooney with chants of “you fat greedy bastard”) for committing the error of “blaming Rooney’s salary upon his personal character rather than upon his situation.”

 

 

It’s just been announced that Bruce Springsteen’s “The Ghost of Tom Joad” will be released as a duet with the Nightwatchman Tom Morello on Springsteen’s new album.*

The timing couldn’t be better, as I work on the syllabus for my spring 2014 course, “A Tale of Two Depressions,” which I’ll coteach for the second time (here’s a link to the course last spring) with Ben Giamo.

 

*For younger readers, Tom Joad is a character in John Steinbeck’s novel The Grapes Of Wrath. Near the end of the story, Tom makes his famous “I’ll be there” speech, which is noted in Springsteen’s lyrics.

Tom Joad: I been thinking about us, too, about our people living like pigs and good rich land layin’ fallow. Or maybe one guy with a million acres and a hundred thousand farmers starvin’. And I been wonderin’ if all our folks got together and yelled…

Ma Joad: Oh, Tommy, they’d drag you out and cut you down just like they done to Casy.

Tom Joad: They’d drag me anyways. Sooner or later they’d get me for one thing if not for another. Until then…

Ma Joad: Tommy, you’re not aimin’ to kill nobody.

Tom Joad: No, Ma, not that. That ain’t it. It’s just, well as long as I’m an outlaw anyways… maybe I can do somethin’… maybe I can just find out somethin’, just scrounge around and maybe find out what it is that’s wrong and see if they ain’t somethin’ that can be done about it. I ain’t thought it out all clear, Ma. I can’t. I don’t know enough.

Ma Joad: How am I gonna know about ya, Tommy? Why they could kill ya and I’d never know. They could hurt ya. How am I gonna know?

Tom Joad: Well, maybe it’s like Casy says. A fellow ain’t got a soul of his own, just little piece of a big soul, the one big soul that belongs to everybody, then…

Ma Joad: Then what, Tom?

Tom Joad: Then it don’t matter. I’ll be all around in the dark – I’ll be everywhere. Wherever you can look – wherever there’s a fight, so hungry people can eat, I’ll be there. Wherever there’s a cop beatin’ up a guy, I’ll be there. I’ll be in the way guys yell when they’re mad. I’ll be in the way kids laugh when they’re hungry and they know supper’s ready, and when the people are eatin’ the stuff they raise and livin’ in the houses they build – I’ll be there, too.

Ma Joad: I don’t understand it, Tom.

Tom Joad: Me, neither, Ma, but – just somethin’ I been thinkin’ about.

_56346784_stagnation

It’s a sad commentary on contemporary economics that Larry Summers’s belated, poorly thought-out, population-driven “discovery” of the possibility of secular stagnation continues to receive such accolades. Paul Krugman gives him credit for “forcefully” offering such a “radical” idea at “at the most ultrarespectable of venues, the I.M.F.’s big annual research conference.” Jared Bernstein, for his part, finds it “compelling.” And then there’s Gavyn Davies, who considers Summers’s speech “a tour de force that demands to be watched.”

Oh, please!

Let’s give credit where credit is due, starting with Paul Sweezy, who offers an appropriate history lesson, explaining how and why the issue of secular stagnation was raised during the First Great Depression and then “so abruptly interrupted by the outbreak” of WWII. And while I’ve never been entirely convinced by Sweezy’s own explanation of the stagnationist tendencies of “monopoly capitalism,” he certainly offers much more food for thought than we’ll find in the present discussion. In fact, Sweezy’s observation about the state of the debate, offered in 1982, is even more accurate today:

I have the feeling that if you ask an economist how we got into the mess we are in, he or she, while not denying that it is indeed a mess, will reply by giving advice as to how to get out of it but will not have anything very enlightening to say about how we got into it.

For my part, I’m all in favor of resuming the long-interrupted debate over capitalism and stagnation, especially about how we got into the current mess. But, if we’re going to take the discussion seriously, let’s open up the terms of debate, in terms of both the history of economic thought and the range of ideas that exist today, which Summers and his colleagues have worked so long and hard to keep on the “radical fringe.”

Hedge Funds 2

Last night, on the BBC program Business Matters, I argued that the Securities and Exchange Commission’s settlement of the insider-trading case with SAC Capital Advisors was just a slap on the wrist—a fine of $1.8 billion that still allows Steven A. Cohen to keep the bulk of his estimated $8-9 billion wealth.

But it was a necessary slap on the wrist in the sense that it was intended to restore faith in markets, not unlike the law establishing insider trading as a crime when the SEC was created back in 1934. Cleaning up financial markets then, five years into the First Great Depression, was designed to rebuild confidence not only in financial markets but in capitalism more generally.

And it worked—alongside the other programs of the first and second New Deals, and of course the recovery created by World War II.

But, I added, I’m not sure it’s enough now. Yes, the SEC is seeking to levy large fines (on Steven Cohen’s SAC and probably on Jamie Dimon’s JPMorgan Chase). However, the people who have been most affected by the financial meltdown—who lost their homes and jobs, and are struggling to put food on the table and send their kids to college—have every right to say, “Been there, done that. We’ve tried investigations, fines, and regulations before and look at the mess we’re in again, in the midst of the Second Great Depression.”

And so maybe, they’ll be singing along with The Who:

And I’ll get on my knees and pray
We don’t get fooled again
Don’t get fooled again

GREENSPAN+PEPPER3

Turn on the television these last few days and you can’t but run into Alan Greenspan, hawking his new book and being fawned over by TV personalities masquerading as journalists. Lest we forget, he was the world’s “rock star” central banker, disciple of Ayn Rand and promoter of financial self-regulation, who presided over the most speculative, casino-like bubble (which eventually, within months of his departure from the Fed, burst) since the years leading up to the First Great Depression.

David Dayen has been watching this charade and gets it just about right:

Needless to say, anyone who’s paid attention to the economy the past few years knows how ridiculous it is to fete Greenspan, the main architect of the policies that led to the Great Recession. If we lived in a just world, we would put him on trial, not on television. And his penalty should be to scrounge up the funds to pay JPMorgan Chase’s $13 billion fine with the Justice Department.

Of course, Greenspan was not alone in praising the subprime mortgage industry and in opposing additional government regulation of the financial sector, including mortgage-backed securities and other derivatives. Indeed, all of the members of his Asset Bubble Band should be put on trial.

But this is America, and they won’t.

OLYMPUS DIGITAL CAMERA

During the First Great Depression, the United States spent a lot of money creating poverty. Americans also spent a lot of time thinking and writing about poverty, which produced some real classics, such as Walker Evans and James Agee’s Let Us Now Praise Famous Men.

Now, in the Second Great Depression, we’ve also created a great deal of poverty—and are finally beginning to think and write about it (although I can’t say we’ve yet reached the level of Evans and Agee or, for that matter, Steinbeck, Caldwell and Bourke-White, or Blitzstein—and I don’t think Hunger Games counts).

But we have learned, thanks to the Associated Press, that 4 out of 5 U.S. adults struggle with joblessness, near poverty, or reliance on welfare for at least parts of their lives.

While racial and ethnic minorities are more likely to live in poverty, race disparities in the poverty rate have narrowed substantially since the 1970s, census data show. Economic insecurity among whites also is more pervasive than is shown in government data, engulfing more than 76 percent of white adults by the time they turn 60, according to a new economic gauge being published next year by the Oxford University Press.

The gauge defines “economic insecurity” as experiencing unemployment at some point in their working lives, or a year or more of reliance on government aid such as food stamps or income below 150 percent of the poverty line. Measured across all races, the risk of economic insecurity rises to 79 percent.

“It’s time that America comes to understand that many of the nation’s biggest disparities, from education and life expectancy to poverty, are increasingly due to economic class position,” said William Julius Wilson, a Harvard professor who specializes in race and poverty.

There are also, as Tyler Durden explains, at least 5 things nobody tells you about being poor.

Being poor is like a game of poker where if you lose, the other players get to screw you. And if you win, the dealer screws you. . .What I am saying is that people are quick to tell you to pick yourself up by your bootstraps and just stop being poor. What they don’t understand is the series of intricate financial traps that makes that incredibly difficult.

Finally, Alanna Shaikh [ht: sm] confesses that she would suck at being poor.

This is all a really long way of saying that maybe the most important thing I have learned in my career is this: poor people are still people. It’s not surprising when they make bad choices, because we all make bad choices. Being poor teaches your some very specific skills for facing a hard life, but it doesn’t make you immune to mistakes and poor choices. It just makes the consequences of those bad choices worse.

I’d only add that, when poor people make mistakes, it only affects them and their children. But one of the pathologies of the rich is that their mistakes affect large numbers of people, especially when their desire to acquire as much money as possible creates a Great Depression.

 

We taught “The Cradle Will Rock,” a superb musical by Marc Blitzstein (no, not the 1980 Van Halen song) and a WPA project, in our course A Tale of Two Great Depressions this past spring. It wasn’t the students’ favorite section of the course (some students simply don’t like musicals, others didn’t like this particular musical, and the politics of the play were difficult for most of them). But we’ll teach it again the next time we offer the course because it is such an important example of the cultural representations in and of the First Great Depression.

Is it any surprise it’s being revived at the New York City Center in the midst of the Second Great Depression?

Here are the lyrics for the final scene from the original 1936 script:

That’s thunder, that’s lightning,
And it’s going to surround you.
No wonder those storm birds
Seem to circle around you…
Well, you can climb down, and you can’t sit still;
That’s a storm that’s going to last until
The final wind blows…and when the wind blow…
The cradle will rock.

Here’s another song from the 1964 Off Broadway production:

 

9781139524162c25_abstract_CBO

Niall Ferguson, Harvard’s gay-bashing bloviating right-wing infotainment historian, has also revealed his profound scholarly ignorance.

Ferguson is ignorant because he doesn’t understand that Keynes’s quip, “In the long run we are all dead,” was a critique of the “classical” (including neoclassical) focus on the “long run,” in which all markets have adjusted and full employment is secured. That was and remains the excuse not to do anything to boost employment in the short run. It’s the reason Keynes argued that “The long run is a misleading guide to current affairs.”

Ferguson also displays his scholarly ignorance by failing to mention the fact that the childless, gay Keynes he mocked actually did write an essay about the long run, ironically titled (at least from the perspective of Niall Ferguson) “Economic Possibilities for our Grandchildren.”

Apparently, Ferguson did apologize for his gay-bashing comments. But he should also issue an apology for his profound ignorance of Keynes’s writings.