On episode 2 we step back and ask do the economy and capitalism and democracy really not work as well as they used to, or does it just feel that way? We’re gonna ask how bad things really are, and how you even define that in the first place.
(Economic) Depression’s in the Air
Why exactly is that? Is it all in our heads?
On the first episode I laid out what the show is gonna be:
(clip) What I wanna do is tell an ongoing story about capitalism and the economy and human nature and what the fuck is happening to the world.
I also talked some pretty serious shit about capitalism:
(clip)If we let it, capitalism will take over our political system, and our art, and our religion and ultimately our souls and drive us to do whatever will make it more money.
Now, onto chapter 2 of the money good podcast, titled in which we step back and ask do the economy and capitalism and democracy really not work as well as they used to, or does it just feel that way? We’re gonna ask how bad things really are, and how you even define that in the first place.
I know from experience that some of you probably think: it’s the same as it’s always been. It’s all in your head. Stop whining. People these days are spoiled. But you’ve gotta admit, it’s not just in my head, right? It’s in other people’s heads, too. There is a lot of talk about the decline of America.
Even if you’re one of the naysayers that think things are just fine in the world, you do have to acknowledge there is something in the ether. And – okay –I do way too much ether. But even teetotalers are affected because the same thing in the ether is also in the air and the zeitgeist and the collective unconscious!
What might be causing all this dour talk? Here are some stats:
The decade of 2000-2010 was the first one in over a hundred years in which zero jobs were created. Zero. And the great recession – this financial disaster we’ve been feeling the effects of since 2008 – it has brought with it the slowest recovery on a per-job basis in the history of recoveries. We’ve been getting back on our feet even slower than we did during the great depression.
This is even worse because wages are stagnant – they’ve been stagnant for a long time. That means even as things sloooowly recover from the financial crisis and the unemployment level drops and people get jobs, those jobs aren’t as good as they used to be. Part time jobs, cut hours, cut benefits. Even the people with the good full time jobs are losing ground. As of 2013 a typical production or nonsupervisory worker earned about 13 percent less than in 1973 adjusted for inflation.
That is not a blip, unless you consider 40 years a blip. The crappy job and wage outlook has a huge effect on inequality.
In 1995, the bottom 50 percent – they owned 3.6% of the wealth in the country. By 2013, it was 1%. 50% of the people and 1% of the money. And a quarter of those people – er, I guess 12.5 %… they have 0 or negative wealth.
One of the reasons this is so fucked up is because – contrary to what some will tell you – where you’re born in life is a defining factor of where you get. Based on a study by the Pew Center, if you’re born in the bottom fifth – you got a 43% chance of never leaving it. And the chances you get all the way up to the top fifth? 4%.
Flip it around for the rich kids among us: you’re born in the top fifth? You got a 40% chance of staying. And you got a 92% chance of never touching that bottom fifth. That’s what people are talking about when they someone was “born on 3rd base.”
So if you’re in the bottom half – and after hours of research and complex statistical modeling I’ve determined that roughly 50% of us are:
things have been shitty for a long time and are always getting shittier and don’t look like they’re ever gonna get any less shitty.
So: today’s word. ‘Depression’
A depression is technically defined as the 4 week to 6 month period after a girl breaks up with me. Hahaha. I’m kidding obviously. I’ve never gotten over a girl that fast.
I chose the term “depression” because we’re talking about the economy when it’s in a bad way, and a “depression” is the gold standard for that. Isn’t it quite a coincidence that the word we use to define the worst state of our economy is also the word we use to describe when an individual’s soul is in a sorry psychological state? For those scoring at home – no, I don’t think it’s a coincidence.
So without even looking, depression is pretty basic, right? It’s an economic downturn. Something like:
a situation of declining economic activity.
Sounds right, right?
Oh wait. No. That’s a recession. Gotta love how I can’t even define which thing it is I’m supposed to define.
Alright, let me get official with it. I’m gonna go to the website for the NBER, which is the National Bureau of Economic research. How do they define a “depression?”
They don’t. Quote un quote “the NBER does not define the term depression or identify depressions”
Alright. So then, fuck official. Let’s just a get an idea, huh? Here’s an excerpt from an article in THE ECONOMIST, a very respected and technical magazine about business and the global economy:
there is no widely accepted definition of depression.
It’s pure goddamned stubbornness that’s stopped me from just picking a different term for the vocabulary segment this chapter. Same article:
Before the 1930s all economic downturns were commonly called depressions. The term “recession” was coined later to avoid stirring up nasty memories.
I never studied economics in school because I was warned it was too technical mathematical. And the economists’ definition of depression is: “Well, it’s the same as a recession, but it’s like realllllllly bad.”
It’s worth noting that the financial crisis we’re still very very very slowly trying to recover from…? It’s called “the great recession.” A direct reference to the great depression.
The Economist finally gets to a sort of vague definition:
A search on the internet suggests two principal criteria for distinguishing a depression from a recession: a decline in real GDP that exceeds 10%, or one that lasts more than three years.
So the definition of an economic depression is “just google it.” But at least
there are some numbers there. Maybe the definition of a depression really is just a “longer and deeper recession.”
Harry Truman said “It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.”
So is the difference technical? Semantic? Qualitative or quantitative or political? Or is it just emotional?
Yeah. I said Emotional. Because I want to go back to something I mentioned earlier: this concept that it’s all in your head. That people are whining. That this is a perceptual crisis. That the economy is the same as it used to be, that people are just spoiled and whine more now.
First, There are about 379,000 different stats that track the economy, and I’ll get into over 6 of them in future chapters, but suffice it to say that they pretty much all suggest things are systemically shittier than they used to be and they have been for a while. But for now, I want to propose that we reject the premise of this argument about “economic problems being all in our head.”
Or not reject the premise – but reject the idea that it somehow matters.
Let me tell you: when people say that the markets or the economy or a recession is all in people’s heads, they’re absolutely RIGHT. Because the economy isn’t a distant solar system or an electron cloud or a math proof. The economy is not something that can be measured objectively and predicted precisely, because it is deeply based on human beings and human emotion.
The economy is just as affected by the crazy emotional randomness of human beings as your sex life is.
Economists – really – are not much more than shrinks for the economy. They look at the patient and try to figure out what’s wrong. Then they look into the past and try diagnosing why things got so fucked up. They try to talk about the present and what might be done to make the economy feel better. And they make predictions about your actions and the consequences they’ll have in the future… which rarely are accurate.
Look at the way we talk about the economy and business:
A recession – a slowdown. A contraction. An adverse demand shock. Inflation and deflation and downturns and bursting bubbles. Stocks are flat. Stocks surge, stocks tank. Bulls, bears, stocks tumbling.
I MEAN REALLY: the economy and the markets DO have mood swings. Anyone who’s ever invested knows that. The whole financial system is one big mood swing. And it is largely determined by perception:
If people think the economy is in a downturn they don’t hire people which leaves people with less money which makes them buy less stuff which hurts companies even more and makes them lay people off which makes even more people unable to buy their shite which makes them lay even MORE people off which lowers sales even more which… you get it, right?
That’s often how things go bad: because people think things are going bad.
So now that we’ve effectively… defined depression.
Wait. I knew I forgot something. Whatever. It’s when shit is bad. Or when people think shit is bad. Or… when people think other people think shit is bad. Or even really, when people think people think people think shit is bad. I know, I know. That’s absurd.
BY THE WAY, if you’re confused as to why Christian Bale was yelling at be about economists, this might clear things up:
Also, I didn’t use this because it would have derailed the whole show, but it’s still fun years later:
3) Cognitive Dissonance
This chapter I want to talk about a speech the president gave that hit home for me. It was incredible, and – almost like great art, it described truths I didn’t even know I felt. I’m gonna read a little bit.
too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns.
Speak it, Barack. The president goes on:
For the first time in the history of our country a majority of our people believe that the next five years will be worse than the past five years. Two-thirds of our people do not even vote.
Pessimism and cynicism. Depression is what he’s talking about. Maybe not “technical economic depression,” but something almost worse. Here the president also puts the blame squarely on our comically dysfunctional government:
You see a Congress twisted and pulled in every direction by hundreds of well-financed and powerful special interests. You see every extreme position defended… to the last breath by one unyielding group or another.
Obama is speaking truth, putting some dark shit out there that’s true. Except that, Barack Obama didn’t make this speech. Jimmy Carter did. And he didn’t give it this year or last – he gave it back when he was a sitting president. In 1979. Just think about that for a second. 1979.
Think about the fact that he said these things 36 years ago, and think about how much they resonate right now:
JC: Human identity is no longer defined by what one does, but by what one owns.… But we’ve discovered that owning things and consuming things does not satisfy our longing for meaning. We’ve learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose.
Carter wasn’t just talking about personal emptiness, but its effect on the way our entire society functions:
JC: Our people are losing that faith, not only in government itself but in the ability as citizens to serve as the ultimate rulers and shapers of our democracy.
It’s disturbing, cuz today, we aren’t losing our faith in democracy. No, that’s over. Damn thing’s lost – as lost as my virginity FINALLY was on the night of junior prom. And Carter knew how bad that was. Uh, not my first time, but people losing faith in democracy:
JC: The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America. I want to talk to you right now about a fundamental threat to American democracy.
President Carter, he spoke the truth in a way that was – politically speaking – either courageous or suicidal.
JC: This is not a message of happiness or reassurance, but it is the truth and it is a warning.
Yeah. Suicidal or not, dude had a pair to say something like that to the American electorate when he had a reelection campaign coming up.
In a lot of ways, Carter was like my high school girlfriend Allison when she told me the sex on prom night was absolutely horrible and maybe we should break up cuz we had no chemistry. He was saying something he knew the American public really didn’t want to hear because he knew how important it was.
That’s because, in the same way a relationship needs at least a decent sex life, a country needs some kind of functioning economy and democracy.
Carter had this speech on the energy crisis scheduled for July 5th. It was written, all planned out, the networks had set aside time to do the whole “presidential address” thing. But then at the last minute, he just cancelled it. No explanation, don’t tell the press anything – just cancel it. He calls his top guys and says – and this makes me fucking love him – he says “There’s more to it than energy. I just don’t want to bullshit the American people.”
Can you imagine (a sitting) American President saying that in private to his inner circle and actually meaning it? “I just don’t want to bullshit the American people.”
Spoiler alert: he did not get reelected.
And that’s one of the reasons this speech is so fascinating to me: because how America reacted to it says a lot about us. When someone tells you a harsh truth, there are two ways you can react. You can accept it, and try to deal with the problem, or you can reject it and distance yourself from the pain. When your girlfriend tells you you’re a bad lay, your first instinct is pain and anger and wanting to deny the truth. Is that what I did? Is that what America did?
A little background: Carter gave the speech on July 15th 1979, and the spring and summer of 1979 was a pretty fucked up time. Just like after the infamous performance review of 99.
There was an energy crisis. There were gas lines that took 6 hours to get through. 95% of the gas stations in NYC were closed. There was a trucking strike and riots were breaking out.
And even beyond the gas thing, there was this growing outrage over… um… everything. People were pissed off over Watergate, cynical from vietnam. There was the rise of the narcissistic “me culture”, drugs, salary stagnation and price inflation (which some asshole brangelina-d into stagflation).
Anger was so in the air people were even fighting back against the evil cultural force of – wait for it – DISCO. There was actually a riot at a White Sox game over disco. Which – I guess you had to be there. Why anyone would riot over disco is something I pledge we will never come back to and explore in depth on this show. You’re welcome.
SUFFICE IT TO SAY: shit was cray cray. It was partially driven by the energy crisis and the dogshit economy. But there was something deeper going on, and Carter saw that.
JC: The threat is nearly invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.
And Carter was specific too – he really laid out the issues, Allison style – going through technique, rhythm, duration, physical dimensions – everything that was lacking in the… economy. But unlike Allison’s, the amazing thing about this speech is that not only was it harsh and critical and negative about America – it was also wildly optimistic and patriotic:
JC: We know the strength of America. We are strong. We can regain our unity. We can regain our confidence. … We ourselves are the same Americans who just ten years ago put a man on the Moon. We are the generation that dedicated our society to the pursuit of human rights and equality.
And it wasn’t just bullshit positivity. He had a ton of specifics and a whole 6-point plan to solve the energy crisis. He had some serious policy initiatives like – and these might sound familiar – limit our consumption of foreign oil, invest heavily in the innovation of alternative energy sources, create a strong conservation program that cuts our across-the-board consumption.
Hmmm. Wonder if anybody drafted off him at all.
Because these are legit policy initiatives. Today. In 1979… I mean shit. It kind of takes me a minute to realize the implications of these things. If we had adopted a real, results-oriented program to reduce our dependence on foreign oil, had invested heavily through government spending and the incentivization of private enterprise in alternative energy – if we had done these things in 1979!!!!! Holy shit. Where would we be now? How different would our economy or our foreign policy or our last few wars- er, um, I mean, “Extended Military Engagements” – look?
It’s a good question. Carter’s speech had 3 rare things: 1) an insightful and almost prescient diagnosis of our problems, 2) an emotionally honest humility that allowed him to speak unpopular truths and 3) specific policy initiatives that could’ve changed our country.
And Like I said earlier: there were two paths. Was America gonna ignore the serious issues and suggestions, or did America want to be honest with itself and work on the sex for the good of the relationship?
Initially, it seemed like America wanted to work on things. Phone calls and letters were flooding into the white house at record levels – 85% of them positive – and Carter saw an instant 11 point jump in his approval ratings!
But then, it all went to shit. And it was partly Carter’s fault. Two days after this incredible speech – he fires half his cabinet. But first, he asks them all for resignations and commitments of loyalty to him before he decides. That does not sound like the action of someone who has his shit together. That sounds like me asking Allison every other day if she was really sure she actually liked me.
Carter’s missteps just fueled the opposition, which came from all sides and accused him of blaming the people for his failures. Ronald Reagan and the press called it the Malaise speech even though Carter never said that word. Congress gave him no support at all, and soon the Iran hostage crisis happened and the way he played that fucked him over completely.
Suffice it to say: Reagan kicked his ass. But that’s not the thing that kills me.
It’s this speech.
And what did we do? Did we hunker down and spend myriad supposed study sessions and weekend nights, um, improving economic fundamentals and learning how to fuc-cilitate positive growth? No. We fought wars and invaded countries and propped up dictators and took out debt and invented new products and invented new types of debt so we could buy new types of products and make even bigger cars and use even more oil!
How do we deal with the economy today? We have huge debates about how to better increase consumer spending. How to increase Shopping! That’s what the experts try to do, and they’re not wrong to. That’s what our system is all about these days, and that right there is a huge problem.
Carter’s speech was so fucking specific to the time, and yet so relevant today. It gives you perspective – but one messed up, schizophrenic perspective. It’s comforting to know that what we’re facing today isn’t unprecedented. Some of the same things were wrong 35 years ago, and people survived, and that’s comforting.
But it’s also horrifying. Because these problems we’ve been exploring this chapter – the “depression” or “recession” or “downturn” or “malaise” – they aren’t caused by some recent phenomenon or specific bubble or crash. They’re systemic, and built in, and have been building for 35 years and longer actually. And they’re getting worse. And all the presidents and pundits and writers and geniuses and game-changers have been unable or unwilling to fix it. I mean – no podcasters have tried as far as I know, so what we’re doing here could well save the world, but it’s still kind of alarming that it falls to us, you know?
Before we move on, I just want to go back to the speech again:
JC: “We are at a turning point in our history. There are two paths to choose. One is a path I’ve warned about tonight, the path that leads to fragmentation and self-interest. Down that road lies a mistaken idea of freedom, the right to grasp for ourselves some advantage over others. That path would be one of constant conflict between narrow interests ending in chaos and immobility. It is a certain route to failure.
I don’t think I have to tell you that I think we’ve gone down that road. He predicted it would lead to “constant conflict between narrow interests ending in chaos and immobility.” I wouldn’t change a word to describe our current political and economic climate.
But President Carter offered another path, what I believe is a better path:
JC: All the traditions of our past, all the lessons of our heritage, all the promises of our future point to another path, the path of common purpose and the restoration of American values. That path leads to true freedom for our nation and ourselves.
Common purpose and collective action, forsaking fragmentation and self-interest. Sounds good. Because even though the world is a completely different place today than it was in 1979… the “Malaise” that Carter never mentioned? It’s just as real and twice as dangerous as its ever been.
HERE IS THE FULL SPEECH on YOUTUBE:
(It’s a little buzzy – I think the sound guy had a little crisis of confidence himself. )
‘What the Heck Are You Up To, Mr. President?’: Jimmy Carter, America’s “Malaise,” and the Speech that Should Have Changed the Country
4) Primary Source
Moving from the 70s to today, I want to include a primary source that attempts to document our country’s currently ongoing state of “malaise.” It’s a book that paints vignettes of American life and how it’s changing. It even puts a clever name to what’s happening: The Unwinding by George Packer.
The Unwinding is his term for the way in which traditional American Life has become less structured, less influenced by large institutions. How those institutions – the government, the church, the traditional idea of the companies, the “moral majority”, – all these things have “unwound.” He says it longer but better:
If you were born around 1960 or afterward, you have spent your adult life in the vertigo of that (the) unwinding. You watched structures that had been in place before your birth collapse like pillars of salt across the vast visible landscape–the farms of the Carolina Piedmont, the factories of the Mahoning Valley, Florida subdivisions, California Schools. And other things, harder to see but no less vital in supporting the order of everyday life, changed beyond recognition– ways and means in Washington caucus room, taboos on New York trading desks, manners and morals everywhere. When the norms that had made the old institutions useful began to unwind, and the leaders abandoned their posts, the Roosevelt Republic that had reigned for almost half a century came undone. The void was filled by the default force in american life: organized money.
It’s sort of what I’ve been talking about, this psychological and economical and elemental decline in everything. It’s not just a decline, but a privatization – leaving more and more that the individual has to figure out on her own or buy from a company.
Packer does an amazing job of painting these little vignettes of people and how they’re affected by all this. Working class families, people falling into poverty, as well as elite political operatives and tech geniuses and even Senator Elizabeth Warren. Here’s another passage about an auto worker who moved to Youngstown in 1980:
John Russo, a former auto worker from Michigan and professor of labor studies, started teaching at Youngstown state university in 1980. When he arrived, he could look down almost every city street straight into a mill and the fire of a blast furnace. He came just in time to watch the steel industry vanish before his eyes. Rtusso calculated that during the decade between 1975 and 1985, 50,000 jobs were lost in the Mahoning Valley – an economic catastrophe on an unheard-of scale.
It was happening in Cleveland, Toledo, Akron, Buffalo, Syracuse, Pittsburgh, Bethlehem, Detroit, Flint,, Milwaukee, Chicago, Gary, St. Louis, and other cities across a region that in 1983 was given a new name: THE RUST BELT.
The book goes on to talk a lot about Youngstown and deindustrialization and its effects on the country. And that’s just one example of the type of fucked up story this book specializes in. To wrap up here’s a quote from the NYTIMES review of the book. IN it, DAVID BROOKS writes:
“The Unwinding” offers vivid snapshots of people who have experienced a loss of faith. As a way of understanding contemporary America, these examples are tantalizing. But they are also frustrating. The book is supposed to have social, economic and political implications, but there is no actual sociology, economics or political analysis in it.”
And I agree with Brooks on this point. If there’s a downside to the book, it’s really just that Packer didn’t try to do more. His style is very “cinema verite”; his focus is on documenting these individuals he’s found that speak to a broader truth about the evolving nature of our society.
But in a way – it would’ve been nice if there were more actual analysis and maybe a concise set of solutions to fix the world at the end. But hey. That’s what this podcast is gonna do.
5) Next Week On Money Good
Biased Against Bias
Next week, we’re gonna look at BIAS – and the the way it completely ruins our ability to judge the truth of things.