Comments on: Was the 1982 Recession Worse than Today’s?: Some Comments

By: Lee

Lee — Sat, 07 Feb 2009 16:31:55 +0000

Mike,

I have to agree. Things are not good but all the doom and gloom talk coming from the news and Dc are not helping instead it is probably making a bad situation worse. Like has been said a lot of wrong information is being spouted. Some of it tries to paint a worse picture than is reality and some that is positive is just plan wrong. For example, I keep hearing that the health care profession has not been effected, and I know for a fact that is wrong. It is not being effected as badly as some sectors, but it is not good. Hospitals ARE laying off nurses and other staff and have hiring freezes on. I know several very experienced RN’s that have been doing wide area searches and have been unemployed for months. In regards to the President, I know some of the rhetoric out of Obama is meant to get his way, but as a whole it doesn’t help the country. IMHO the country would be better off if Obama truly emulated FDR and presented a message of things will get better. Not the world is falling apart. We have a very long way before we get to the conditions seen during the great depression, but I think the comparison to the 80′s is proper at this time. Thanks for a good article as well as the good comments left by fellow posters.

By: mike

mike — Sat, 07 Feb 2009 15:28:10 +0000

Donald, you ask some tough questions! First, I’d say that the 1982 recession was more localized, in the rustbelt for example. These were union strongholds and one purpose of the high interest rates was to weaken organized labor, so that when expansionary polices could be implemented, there would be little worry of inflation. This worked well as labor has still not recovered and unions have been pretty meek at the bargaining table, making concessions even when they did not have to. Second, Reagan ran huge deficits, so there was Keynesian stimulus, though aimed at the military and the rich. Third, then debt was not so severe, and this helps explain why consumption did not collapse. Fourth, you make good points about media, though misinformation seems to me to be the main problem. Economic understanding is so low that Fox for example can say any silly thing and does, all day long. However, on the issue of fear, the problem is that we have no real opposition here, one that coujld really mobilize people as they are being mobilized elsewhere to try to do something about what is happening.

I hope you own economic situation gets better.

By: mike

mike — Sat, 07 Feb 2009 15:17:11 +0000

Thanks for your comments. This could be a perilous time for democracy. Or it could be a time of democratic upheaval. Let us hope for the latter.

By: Donald Gordon

Donald Gordon — Sat, 07 Feb 2009 13:12:04 +0000

I enjoyed your column recently in response to “The Economy Is Bad, but 1982 Was Worse” , but I’m still left with the question that no one seems to be answering (or even asking for that matter!). I was around in the ’80′s, like you, and fully employed working in the banking industry. The economy always looks rosier if you’re not one affected by a recession, but even that aside, I simply don’t recall unemployment being as big an issue as stagflation at the time.

The question I have is “Why wasn’t there the call for a huge stimulus package and a large dose of Keynesian economics in ’82?” Let’s separate the TARP bailout, since there’s obvious reasons for the injection of government spending to rescue the financial industry. What I’m questioning is the oncoming onslaught of a trillion dollars of the new bailout. There’s constant chatter about getting people back to work (I’m one who this time around is in the ranks of the unemployed) and spending large sums to do that, but there was never that talk (or at least very little of it) in ’82. What’s going on here?

On the flip side, we didn’t see anything like the collapse of consumer spending and retail failures then like we’re seeing today. Yet this collapse certainly can’t be explained by the unemployment rate being higher since they’re about equal. I guess there’s a part two to the question, which is “why is consumer spending collapsing to such a greater degree today than it did in ’82?”.

Finally, you make a good point that “After 1982, lower interest rates and tax cuts fueled consumer spending. Today these have no impact on spending, as households must pay back debt or put money aside in anticipation of job loss.” However, what that tells me is that the real issue here is “self-fulfilling prophecy”. People are much more frightened today than in ’82 but we’ve been conditioned to be frightened by the media – much of which didn’t exist then – the Internet and cable news.

Everyday we’re being assaulted by bad news. It’s like watching the weathermen tells us how cold it is outside. Eventually we stop going out until it gets warmer. It’s not that the cold is necessarily dangerous, but rather that we’re told over and over that it’s too cold to go out. I suspect – and remember I’m one of the long-term unemployed right now – that our major problem today is expectation of catastrophe that will soon be self-fulfilling.

Donald Gordon
Chicago

By: Fred Dodsworth

Fred Dodsworth — Tue, 27 Jan 2009 07:37:19 +0000

Excellent analysis of our perilous times. When I was in grade school, in the 1950s, my teachers proudly explained the critical difference between the shining beacon of America and the ‘Banana’ Republics south of our border: The gap between rich and poor.
Because their average citizens were so poor while their leaders were so rich, their governments were ‘naturally’ unstable. Today there is no essential difference in the scale of wealth between the citizens of America and the citizens of our sister countries down south. Welcome to the coming revolution/depression.