The Great Depression was not like what we are experiencing now. You didn't have "Help Wanted" signs in windows of restaurants as you do now. People were "desperate for work" and would "take anything." A government job was prized because, while the pay might get cut, it was "steady." You admired the man of "grit" and "moxy" and "gumption", the one who "knows his onions," and could find work, and you despised the "leaner" or "moocher". You had pity for the hobos who came to the back door asking to do chores for a meal. "Mister, Do You Think I Could Sleep in Your Barn?" was a song of the time, along with (of course), "Brother, Can You Spare a Dime?"
But you cut off complainers with, "Yeah, things are tough all over." And you joked about Herbert Hoover's promise that good times "are just around the corner," ("so," as the song said, "let's have another cup of coffee and let's have another piece of pie").
When liquidity dried up, "hard boiled" bankers "wouldn't lend you money unless you didn't need it," so people turned to "cash only" exchanges, and then barter. Kids wore hand me downs, mothers darned socks.
Playwrights and communists presented people's troubles as political tragedies, but ordinary folks wanted escapism at the picture shows, not high drama. That, indeed, is the message of Preston Sturgis' late Depression motion picture romp, Sullivan's Travels.
Generational theory suggests that when an age cohort dies out--as the generation of those who were adults at the start of the Depression has nearly died out now--the new crowd starts to make the same mistakes over again. For those of us whose parents were around to experience the Depression, the knowledge of it comes second-hand or from books like Amity Shlaes' fine current work, The Forgotten Man.
It was a modern era, nonetheless. Television had been invented, there there was no TV broadcast system yet. People "listened in to the radio". Cars were common, but the first freeways were still in the future. "Auto touring" was something the well-off enjoyed. In the early years of the Depression, no business was spared, except perhaps bootlegging under Prohibition, but eventually Hollywood and automobiles revived, and government employments boomed. Not much else. As we all know, the Second World War pulled us out of the Depression at last.
What caused it? Hoover and FDR failed to supply liquidity, for one thing (Milton Friedman was to blame much of the economy's ills on it) both engaged in major fiscal stimulus--that was the main theme of the New Deal, after all. Some new banking and stock market regulations were warranted, but there was a tendency under Roosevelt to try to scapegoat the "economic royalists" for the nation's ills, and that frightened Main Street as well as Wall Street. Even a man as great as the former Treasury Secretary, Andrew Mellon (who later gave us the original art collection and the building for The National Galley on the Washington, D.C. Mall) was assailed and sued. People under attack generally don't make confident investors.
Regulations changed repeatedly, also adding to investor stress.
At the same time, tax rates were raised by both Hoover and Roosevelt, another huge mistake. Trade protectionism was adopted (by Hoover). These two blunders further fated the nation for a long, long slump.
The big fight over public versus private power was a waste of time, since the real need was to build the dams and get the power delivered at low cost. Government could have helped ease the way and the private sector could have delivered--just as is the case now with our neglected opportunity for nuclear power plants. Instead, the matter was turned into another stage for ideological drama.
Overall, the Great Depression of the 30s was not necessary. A cyclical downturn was turned into something far worse by government mistakes, and the resulting economic swamp became a world-wide breeding ground for totalitarian opportunists, from Nazis to Communists.
Now we face another cyclical slump, the product of living beyond our means as individuals and as a government that encouraged the tendency. Government policies helped provide incentives for reckless risk-taking, especially in home ownership.
Again we are dealing with a crisis. Government certainly has provided liquidity this time, but it hard to know the principles upon which financial bailouts have been proffered. Last spring's "stimulus" amounted to a big handout that had virtually no effect. The lesson is that monetary policy should be clearly understood and fiscal stimulus very limited.
Now, too, instead of new protectionism, we should emphasize free trade. The rest of the world needs us as customers and we need them.
We should have tax rate cuts at the top margins--not out of any misguided love of the rich--but because businessmen and farmers and pensioners need to have incentives in this environment to takes educated risks--and in the process, create jobs.
It would be a great mistake to engage in class warfare through the medium of litigation. We do not need new laws like the Lilly Ledbetter Fair Pay Act that would encourage trial lawyers to sue businesses for real or imagined mistakes. The Paycheck Fairness Act, another liberal favorite, would force feminist "comparable work" policies that would distort market forces within companies and expose those companies to endless lawsuits over supposed discrimination going back decades. Making a recession into a source for adventurous lawsuits is like holding parade inspections of an army while it is on the battlefield fighting. It is a gift to the enemy, in this case the recession.
Then there is the "card check" bill of the AFL-CIO. All by itself it can help crush small businesses by forcing unions--without a vote of workers--onto struggling companies. Yet it has passed the House once and has nearly enough votes to prevent a filibuster in the Senate,. President-Elect Obama campaigned in favor of it.
Right now, the new Administration seems to mean well, but is rudderless on the big challenge facing it and all of us, the economy. Confusion, constantly changing signals and too much experimentation contributed to the length and depth of the Great Depression. One senses similar scary ambiguities in the present situation. There is much talk of growth, but repeated examples of subsidizing failure instead.
The culture may have changed since the 30s. We have "food banks" now rather than bread lines, but human nature has not changed. Neither, for the most part, has economics.