Is It 1982 or 1974?
Much of the commentary on the current economic crisis has compared 2008 to 1982, the depth of the last major recession. But there are some important differences, chief among them that, despite losses in manufacturing in the early 80's, the United States still emerged with significant manufacturing capacity. Whatever happens in 2008, that's not going to be the case: Manufacturing is down to ten percent of the American economy—and still falling.
And that points to another difference: Despite his many failings, Ronald Reagan at least understood that, unless a country makes things, it has no economic independence. That's why he was willing to act pragmatically, despite his own stated commitment to free-trade ideology.
Those who claim his mantle today, however, are not simply ideologues on free trade; they have become convinced that money can breed money—and, moreover, that it's a good thing for it to do so. The only kind of manufacturing they want is the manufacturing of ever-higher stock prices.
But there are other reasons to think that 1982 isn't a proper historical analogy. This just came across the CNN Breaking News wire:
U.S. employers cut 533,000 jobs in November -- the most in 34 years -- as unemployment rate rose to 6.7 percent.
Let's see—2008-34 gives us? That's right: 1974. And despite the brief period of deflation in the last two months, the inflation rate has been hovering between four and five percent this year. High inflation plus high unemployment sounds awfully familiar, even to a mere boy like me. Yes, both are lower than they were in 1974 (or in 1982, for that matter). But the snapshot matters less than the direction, and in 1982, the economy was already beginning to turn the corner.
So, 1974 it is. Unless, of course, it's 1929.
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* not suck problems but "such"..
Anyway, the reason the Big 3 are going cap in hand to Uncle Sucker is that they made no money selling cars. Their profits came from lending money to car buyers. When the bottom fell out of the debt market, it was only a matter of days before GMAC, Ford Credit et al. felt the pinch too. This is not an auto bailout, nor is it a concession to UAW voters in Michigan and elsewhere, but it's all tied in to the loan business. The bright side is that there will still be a market based on servicing existing vehicles as the general public stretches the life of what they already own.
I cannot believe the ignorance of this discussion. What is the relevance of how this small online community feels about American vs foreign cars to the larger isue of a multi-billion dollar bailout of Detroit? This is what I meant above (in part) by pointing out the lack of proper analysis in this discussion. How you/we "feel" is totally irrelevant. What is the moral justification for stealing taxpayer money to subsidize a particular industry, when most of us are left to sink or swim on our own in the marketplace (which is exactly how it should be)? And what is the economic justification? I note the author simply ignored these points when I raised them in #'s 41, 42.
The only possible justification for a Big Three bailout would be a national security one: that we need that productive capacity for possible military uses, and that it is irreplaceable. But that argument must be proven, not merely asserted. I am very disappointed.
I think part of the problem is that people have forgotten what an economy is for. While it may be more desirable to be wealthy than not, it is not the primary purpose of the economy to make anyone or all of us rich. Wealth originates in the soil and the craftmanship that is brought to bear on the products of the soil, not from shuffling paper (including the rice paper our money is printed on) useful as some of that is. The US auto industry (along with many other industries especially financial and government) from top management to the security guards seems to have morphed into a colossal enterprise to enrich its members more than their neighbors are able to enrich themselves. Very few of any of these people are happy with their lot in life. Although I don't work in the auto industry, I have visited a number of plants and the emotional tension in them is horrendous. Managers and employees are barely civil to each other when they are not outright abusive. Furthermore, the working conditions, although they may be "safe" and efficient are often inhumanly boring and repetitive -- not a good trade-off.
I think part of the problem is that people have forgotten what an economy is for. While it may be more desirable to be wealthy than not, it is not the primary purpose of the economy to make anyone or all of us rich. Wealth originates in the soil and the craftmanship that is brought to bear on the products of the soil, not from shuffling paper (including the rice paper our money is printed on) useful as some of that is. The US auto industry (along with many other industries especially financial and government) from top management to the security guards seems to have morphed into a colossal enterprise to enrich its members more than their neighbors are able to enrich themselves. Very few of any of these people are happy with their lot in life. Although I don't work in the auto industry, I have visited a number of plants and the emotional tension in them is horrendous. Managers and employees are barely civil to each other when they are not outright abusive. Furthermore, the working conditions, although they may be "safe" and efficient are often inhumanly boring and repetitive -- not a good trade-off.
And thanks to our enslavement (not all of it voluntary) to the financial industry and their apologists, the economists, we are shedding our manufacturing industry, we are firing our farmers, mining the dirt with GMO corn and soybeans and wheat, and sterilizing the once soil with toxic chemicals, we are subject to an "education" industry whose sole purpose is brain washing the citizenry, we are increasingly subject to spying by our police forces on behalf of our government, and we are watching as corporatists, in the name of capitalism, reap huge rewards for sending our white collar work to India and other places. (The Federal Reserve estimates there are or were 50,000,000 such jobs and that everyone of them is exportable.)
The good news is this can't last. The rest of the planet is just as capable and creative as we are at producing pretty pieces of paper and probably like their own designs better than ours. If we want things, we are going to have to make them. If we want to eat food we are going to have to grow it.
During the depression my grandfather's family moved out into the country so that they could grow a large garden. It was a tough life but it was better than starving and, moreover, they were able to cultivate family and community life. I suspect that this was the case for many people of that era. Times were hard but they made do and their lives were still fully human. We are in a much worse place than in 1929. Few people own property and even fewer know how to grow food and keep animals.
Lee is correct, industrial style factory work is dehumanizing. But the managerial-bureaucratic economy is even worse, it is pure evil. I see no evidence that civilization or even basic human culture can survive this demonic revolution. I think our society could survive if we had some semblance of balance between small farms, local businesses, and industrial factories. Even if this model only made up 25-30% of the country. I see no evidence, however, that religion, community, and the environment can survive a purely technological/industrial/managerial society. Since manufacturing can actually fit into a workable cultural model, then we can justify its preservation.
Nobody in their right mind can justify preserving any form of the Wall Street corporate-bureaucratic model. If anyone can point to a society in history that has survived the destruction of religion and community, caused by, among other things, hypermobility, urbanization, divorce from nature, devaluation of children and motherhood, etc. please let me know.
@51, Lee, forgive me, I lost the seeming intent of your comment, which was to inform us:
"...what an economy is for. While it may be more desirable to be wealthy than not, it is not the primary purpose of the economy to make anyone or all of us rich. Wealth originates in the soil and the craftmanship that is brought to bear on the products of the soil, not from shuffling paper (including the rice paper our money is printed on) useful as some of that is."
Then you jumped to the "morphed auto industry" existing to enrich itself and other unlikable conditions within that industry. Somewhere, along the way, I missed your definition of the purpose of an economy.
Mr. Haller is correct in all his above posts. There is no moral justification to take money from productive people and give it to the unproductive.
My earlier post was just sentimentality and wishful thinking.
It's 1929 for sure, and here's why:
When small men cast long shadows...
"those cheap foreign-made vehicles the “market is god” folks are celebrating won’t be so cheap if the U.S. automakers go under. That means foreign dominance and a loss of liberty."
Of course, if the bailout of the big 3 proceeds, the fedgov will gain control of US auto production. Then we can have the worst of both scenarios: the US auto industry going under and increased federal dominance and loss of liberty, life and property. Maybe the slim possibility of "foreign dominance" isn't as scary as it seems to you right now.
"The news another 500,000 people lost their jobs last month, bringing the total for the year to two million, makes me sick to my stomach."
The sickness is from fear. Fear is what the news media serve up daily. It's a necessary component of the program conducted by the news media to promote the agenda of totalitarian government. Turn off the TV, Mr. Stonehouse. The cloud of fear under which you live will begin to lift soon after you stop allowing the input.
Apparently, Mr. Roberts (@61) lives in an area where the unemployment rate is dropping, rather than rising. Good for him. Some of the rest of us do not. I do not watch the TV news--national or local--but I walk down streets where I see houses that have been on the market for over a year, from which people have simply walked away because they can no longer afford to pay their mortgage(s), having been out of work for far too long.
Yes, the news media love to play on fear. But that doesn't mean that what they're reporting is entirely untrue.
Mr. Roberts
It isn't fear--I am self-employed and secure. I am also surrounded by family and friends who take care of each other. It is sadness for what is happening and what likely lies ahead.
@57 Josh
... industrial style factory work is dehumanizing. But the managerial-bureaucratic economy is even worse, it is pure evil.
True! I just watched Mike Judge's brilliant movie Office Space last night, and I thank God I chose to become self-employed to escape the sinister office routine. My job was so unfulfilling, and my boss so cowardly, that I knew I'd never be fired. The routine was so impersonal that I was forced to quit of my own volition and make my own way in this cold, cruel world.
@66, Etienne Gervaise,
In #52 you said you traveled 50,000 miles a year and have 423,000 miles on your Ford Ranger. You are also in business for yourself. If I am intruding, please ignore my questions, but are you in a service oriented business, and if so, what kind of service? Or is it a product you manufacture and sell around the country?
65Mr. Stonehouse
66Etienne Gervaise
You gentlemen are self-employed... as am I.
And I certainly wouldn't have it any other way.
However, why do you believe that this economic tsunami will by-pass you? It certainly has begun to impact my revenues but, I saw it coming and made appropriate plans by foregoing major expenditures for the last 2 years.
I'd be interested in hearing your views. Thank you.
H.F. Wolff
@67 J Meng
If you must know, I'm a construction consultant -- dealing with the paperwork end of things. An entrep[reneur if you will who goes between the construction company and the local government. To quote Office Space -- I have people skills dammit!
@68 HF Wolff
I do not expect to evade any downturn, but being in Ruburban Washington, downturns are not as bad as they could be elsewhere. I do hedge my bets by planting Norton grapes in my backyard. A local winery will buy everyting I can harvest.