‘‘I wonder what it would be like if we went into another depression,” a friend wondered aloud in his arch baritone voice. The question was floated over lunch some six months ago, when the economic climate seemed uncertain but not yet unsteady.
I said there would be no sequel to the Great Depression. The shrill fear and catastrophic war it spawned made governments much more responsive during fiscal crises.
Indeed, the Treasury is currently a blur, bailing out lenders and insurers; the Federal Reserve Bank is all but throwing money out its office windows. The incoming administration may well approve another stimulus package as early as inauguration day.
The end result remains to be seen. Some of the actions will work, some won’t. However, the mere act of acting will prove far better than what was done during the first one-third of the Great Depression: virtually nothing.
Despite this flurry of activity, you would think we’re partying like it’s 1929. The Los Angeles Times recently ran a graphic in its business section of a once middle-class family standing in a soup line. A New York Times columnist sourly joked that we’ve all taken up squirrel hunting as a new vocation. Many such dark musings appear daily in the media.
My friend and I had both worked as journalists, and we’re intimately familiar with how the skeptical nature of the profession drives tough questions and astute analysis. However, it also tends to generate a worldview of gallows humor bordering on apocalypse. Has it reached the point of whistling in the cemetery?
The fourth estate has been in a depression of its own for years now, having been ravaged by ceaseless rounds of layoffs and buyouts. Indeed, the L.A. Times graphic ran the day before its parent company filed for bankruptcy. So I’m concerned – but not surprised – when I hear or read that the economy is “tanking” or “cratering” rather than sluggish or in recession. Or that loans and mortgage-backed securities are “toxic” rather than underperforming. Although the comparisons to the 1930s have moderated in recent weeks, they remain persistent enough that I’m surprised we’re not all living in jalopies, our hollowed-out eyes shaded by tattered, plaid caps.
Even relatively good news is often delivered in funereal tones. For example, Southern California real estate sales have been consistently up in recent months. That the majority of these sales are of foreclosed homes is considered grim news by its messengers, even though it means the local real estate market is self-correcting in a relatively quick fashion. It would be frightening if these homes sat empty for years, but they’re not.
Some might mutter that my head is stuck in the sand. Indeed, my head has been stuck – in the books of historian Robert S. McElvaine, author of a number of well-regarded books on the Great Depression. They contain some truly astonishing numbers, such as the fact that gross business investment in the United States plummeted 98 percent between 1929 and 1933. I looked up the most recent Fed data: Gross private investment is down about 10 percent from its 2006 peak, while government investment is up about 15 percent. Total net decline thus far: less than 1 percent. The Fed would print money on its office copiers to keep it from falling even 5 percent.
Current Fed Chairman Ben Bernanke, himself an expert on the Great Depression, recently observed that the economic conditions of 75 years ago are no comparison to what is going on today. His comments were broadcast on NPR – one of the very few news organizations whose audience has grown over the past decade. As far as I can tell, it was repeated nowhere else.
I’m the last person in the world who wants rah-rah news if it’s not justified. I just want it delivered appropriately, accompanied by solid analysis. Every time Chris Matthews turns grim and hesitant as he suggests the current economy may go “beyond a recession,” or a print story suggests that retailers became ghost towns immediately after Black Friday (they’re not as crowded as in recent years, but nor are they deserted), it dents our collective psyche. Such rhetoric makes the roughly 90 percent of the workforce whose jobs are safe put off a purchase they could afford. Or it goads talented entrepreneurs to skip what could be a crucial networking event because they didn’t think it was worth the bother. Psychology to economics is what pitching is to baseball – about 70 percent of the game.
My hopes of moderation may be overmatched by the hyperactive demands of the 24-hour news cycle. But I do know that no journalist worth his salt wants to become part of the story he’s covering. When that’s in danger of happening, the best ones step back, take a closer look at all the facts, and work even harder to put everything in perspective. More of that would be useful now.