In my career I have reviewed thousands of resumes and conducted hundreds of employment interviews for both The Trademark Company and other businesses for which I have worked. In doing so, I got to see the good, the bad, and the downright ugly in terms of resumes, interviewing skills, and the like. For other CEOs looking [...]
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VIENNA, Va., Oct. 14, 2011 /PRNewswire/ — With many banks going through changes in how they manage checking accounts, customers may start looking elsewhere for ways to keep the cost of personal banking down. In some cases, this may involve switching their checking account to another bank…
PR Newswire: Financial Services
The New York Times and its imitators have taken to calling the economic events since 2007 “The Great Recession.” Editors seem to love it. The term is lame pun. It evokes the Great Depression, but not as deep.
But with unemployment rising, growth slowing, housing prices continuing to fall, and government dithering, it’s time to retire the term as entirely inadequate and misleading.
Here are a few alternatives:
If you comment on this post, please suggest your own. (We seem to have trouble in this century with names. We never did manage to come up with a proper name for its first decade.)
Why not a Great Recession? For starters, the economy is technically not in a recession once GDP growth has turned positive, which has been the case since the fall of 2009.
So technically, this is no longer a recession at all, let along a great one. Isn’t that reassuring?
But no serious person thinks this mess is over. GDP growth slowed again in 2011, and we could go back into negative territory next year.
Economic growth, in fact, was positive for most years of the Great Depression once things bottomed out in 1933, but it was still very much a depression.
What’s the difference between a recession and a depression? A recession is a fairly mild, cyclical event. It either corrects itself, or is corrected by fiscal or monetary stimulus and then things return to normal. (Often, recessions are needlessly caused by the Federal over-reacting to whiffs of inflation and strangling the economy with tight money, but I digress.)
A depression is a whole other creature. It is self-deepening. People are out of work; purchasing power falls; businesses cut back; despite low interest rates, banks are reluctant to lend; housing values fall, and the cycle intensifies. Sound familiar?
Recessions can originate from any number of random causes. Depressions usually begin with calamitous losses in the financial sector. Sound familiar?
A classic definition of a depression was offered by the economist Irving Fisher in 1933, as a “debt-deflation.” The value of assets (say, houses) declines, while the value of debts is fixed. In a general crash, a fire-sale mentality takes over, depressing asset values still further. As asset values decline, people tighten their belts and the whole cycle deepens. Sound familiar?
To put it in more technical economics terms, the economy gets stuck in an equilibrium well below its potential of output or employment.
Now there are two big differences between the Depression of the 1930s and the events of this decade.
One is that the Great Depression, at its pit, was more severe. GDP, for instance, declined by more than 60 percent between 1929 and 1933 (though it rebounded and grew smartly between 1933 and 1936). And unemployment was higher, especially in the early 1930s, peaking at 25 percent in 1933.
On the other hand, real unemployment defined as people looking for full time jobs and not being able to find them, is not that far below Great Depression levels after 1933. It’s at least 15 percent depending on how you count people who are out of the measured workforce.
But the other difference is the more sickening one — the difference in government policy then and now.
After 1933, government did its best to get the economy out of the trap. Roosevelt not only offered large scale public works. The Reconstruction Finance Corporation recapitalized banks and industries. The Home Owners Loan Corporation refinanced one mortgage in five. The Federal Reserve was in the hands of a relative progressive, Marriner Eccles. And even Roosevelt was capable of serious errors such as the premature fiscal tightening of 1937, which resulted in a recession within a depression.
Today, though Obama began on a tide of hope, both parties are mired in the delusion that the economy needs nothing so much as a dose of austerity. Fed Chairman Ben Bernanke, who was willing to recommend very strong medicine as an academic critic when the comatose patient was Japan, does little more than mouth platitudes, as he did Friday at his Jackson Hole speech. And despite the Dodd-Frank Act, there is little political appetite to rein in the deeper excesses of the financial system, which caused this collapse and will cause the next one.
What little economic stimulus Obama is prepared to offer is relentlessly blocked by Republicans, signaling Obama to think small.
So while today’s economy is surely more like a depression than a recession, we are still seeking the right adjective.
How about The Needless Depression?
Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.
Green is good for business. Not greenwash, GREEN. By working with nature rather than despoiling nature, Ray Anderson has led his company to high levels of success and profitability.
Ray Anderson died this week, of cancer. And the cancer is not incidental to this story. Ray was a friend and an inspiration. A lot of people talk about the environment. Ray did something. A lot of people say that we have to choose between a livable environment and a prosperous economy. Ray showed them that they were wrong, and he did it in an industry which is one of the most toxic around. Though it is impossible to know with absolute certainty precisely what causes a cancer, Ray spent much of his early career in the old-fashioned carpet industry … one which used (and still uses) bioactive, petroleum-based chemicals to manufacture the carpets. There’s a very good chance that long-term exposure to those chemicals caused the cancer that killed Ray.
In 1994, Ray read Paul Hawken’s The Ecology of Commerce. Ever after he characterized that experience as a “spear through the chest.”
Quite simply, Ray realized that the industry in which he was making his fortune was killing the earth and he did the only reasonable thing; he committed his company (Interface) to becoming, much more than just sustainable, restorative.
The last time we talked with Ray, we talked about that journey which he came to call “climbing mount sustainability.” He tells the story of that journey in Confessions of a Radical Industrialist. It is a story everyone needs to hear. It is a story which gives the lie to the self-serving arguments of those who believe that money is more important than life … their money, your life. As a stark choice, most of us who are not certifiably nuts would choose A (life) over B (money). So, the profiteers obfuscate the choice. Taking their cue from the tobacco industry, they spend millions on denial, distraction and diversion. And they buy politicians.
What Ray did, bless him, was to demonstrate that the life-versus-wealth argument is all wrong. All that is required is honesty and imagination and really good business skills … and the willingness to work like hell to bring one’s vision to fruition. Ray fit the bill.
We will miss Ray. We would have missed him even more had he not shown us that we can rise above parochial self-interest. Call it enlightened self-interest. Call it leadership. Call it a good man who did an astonishing amount to make our world better. Call it a challenge to each of us to do so well.
BLOOMFIELD HILLS, MI–(Marketwire – Aug 8, 2011) – Great Expressions Dental Centers (GEDC) announced it has acquired the Goodman Orthodontics practice of Dr. Sindy Goodman DDS, MS and Dr. Robert Goodman DDS, MS located in Novi, Michigan.
Marketwire – Mergers and Acquisitions
Here’s the bad news about today’s jobs report: It proves once and for all that we are in a slow growth economy. And that’s worse news than you think. Next to recent headlines, of course, most people would take slow growth. For the past few weeks, more and more forecasters have been saying that the [...]
The Curious Capitalist
BLOOMFIELD HILLS, MI–(Marketwire – Jul 7, 2011) – Great Expressions Dental Centers (GEDC) announced it has acquired the Wright Dental Care practice of Dr. Scott Wright DMD, FACP and Dr. Elizabeth Hevia-Wright DMD, located in Belleair Bluffs, Florida.
Marketwire – Mergers and Acquisitions
