A PHP Error was encountered

Severity: Warning

Message: Illegal string offset 'set_all_segments'

Filename: extensions/ext.low_seg2cat.php

Line Number: 134

MN2020 - Minnesota 2020 Journal: The Ghost of Tom Joad
Archive Hosted by the AFL-CIO

Minnesota 2020 Journal: The Ghost of Tom Joad

July 23, 2010 By John R. Van Hecke, Executive Director & Fellow
 
This recession is hanging on, a nasty cough that won't go away. It hasn't become an economic depression but it's different from all preceding post-World War II recessions.

During recessionary periods, consumer confidence falls and spending contracts. People cut back, seeking ways to reduce household spending and stretch their shrinking dollar. Discretionary purchasing typically declines. Buying that new thinner, flatter, brighter, cooler television is suspended in favor of household necessities like food, water and electricity.

But, as recessions pass, the frugality impulse fades. Consumers quickly return to pre-recessionary spending patterns. Getaway vacations, augmenting regular vacations, are suddenly back in the mix. The television replacement morphs into a media-center acquisition. All of it is financed through short-term, high interest rate loans generously extended by credit card companies. Home equity, created through booming housing values, is captured and turned into lifestyle cash.

Normally, this or some version of it is what happens after fifteen to eighteen months of recession. Except, I can't shake the feeling that this time it's different. We're nearly two years into the present recession and, broadly, the experience remains constant.

The housing market remains deeply depressed. Long-term unemployment numbers aren't improving. Consumers are buying necessities and not much more. Family vacations are three days in the Wisconsin Dells rather than a week in Cancun.

The new frugality, reflected in stretch-your-dollar blogs and consumer review posts, is becoming the new normal. Even without a depression, we may be creating a new depression generation.

The Great Depression transformed Minnesota life, profoundly and irrevocably altering lives. It left a large, indelible foot-print across our state. Even during the most exuberantly irrational post-war spending moments, the Depression generation closely monitored their resources. They saved. They clipped coupons and monitored costs. They replaced televisions and refrigerators only when they could no longer be repaired.

The Depression generation's frugality ethos ran counter to the 20th century's acquisitive mass consumer experience. When the Coca-Cola Company linked positive human interaction with purchasing behavior, urging people to "have a Coke and a smile," the Depression generation was quite comfortable just smiling. Deep memories of hunger and anxiety fueled their frugality. They wanted everything that modern industry produced but they'd learned, the hard way, about the consequences of unserviceable debt obligations.

That tight smile, politely declining the Coke purchase invitation, both hid and revealed bitter lessons.

Poverty of the 1930s was dramatically different from today's poverty. Eighty years of social safety net building has eliminated most absolute destitution. Writer John Steinbeck's observations informing "The Grapes of Wrath" were rooted in migrant farm workers' real experiences. The poverty pouring from his pages is contemporaneously observed in Dorthea Lange's farm worker camp photos. More importantly, the Depression generation's poverty experience, whether deep or modest, guided decisions for the rest of their lives as they prepared for the next financial disaster that could wipe out family savings, forcing them from their homes.

Financial stability, they believed, was illusory. Even when their children chafed at wearing patched clothing or their grandchildren suggested moving to a better neighborhood, they resisted, believing that another great depression was entirely possible. Survey research increasingly suggests that they were right.

In a recent Pew Research Center survey, less than half of the respondents felt that their children would enjoy a higher quality of life than they themselves experienced. That sentiment suggests a life-style reorientation. In respondents' minds, temporary behavioral changes may become permanent.

The survey records altered spending patterns. Seventy-one percent purchased a less expensive brand, a phenomenon readily revealed on every retail store's shelves. Fifty-seven percent changed, cut back or eliminated vacation plans. Twenty-four percent of 18-24 year olds moved back in with their parents. A small number have postponed marriage or having babies.

But, this survey uncovers a ray of hope. Forty-nine percent of respondents loaned someone money. I suspect that these loans occur mostly within kith and kinship networks, meaning that relatives and close friends lend to or borrow from each other. That's a critical act of faith in family and community, creating hope as opposed to false communities created by conspicuous consumption that collapse when purchasing power diminishes.

Smart, effective public policy flourishes when it builds and reinforces strong community bonds. Only through strong schools, affordable health care, robust transportation infrastructure and forward-looking economic development, can Minnesota begin growing and prospering again. We must invest in ourselves, focusing on building strong, responsive and agile communities. Hunkering down for the rest of our lives won't move our state forward.

We can learn the Great Depression generation's hard lessons, retaining our effective social safety nets by prioritizing budget cutting and capital investment decisions. Minnesota's elected state leaders need to follow the lead of the 49 percent who loaned someone money, despite the recession's beating. Battering vulnerable Minnesotans is the conservative plan; the progressive alternative, the only way forward, is growth.


website metrics

Thanks for participating! Commenting on this conversation is now closed.