Depressions, mental and economic

Doug Henwood dhenwood at panix.com
Sat Jul 8 10:55:00 MDT 1995


At 2:36 AM 7/8/95, Jim Jaszewski wrote:

>        Even tho' I've always believed that 'recession' was a euphemism
>for the _real_ word -- depression, I've been 'told' often enuff that
>recession is the _proper_ term for some mild slowdown that differs in some
>'technical' sense from a true depression. Even a communist has told me
>this one...
>
>        So; IS the word 'recession' merely a term coined to _not_ carry
>all the emotional baggage that 'depression' does, diverting unwanted
>attention during difficult economic times, to avoid having to deal with
>effects of 'non-depressions' and to keep nervous nellies from panicking
>and further depressing the markets? Is the only reason that they can use
>such a term because our fast-dying social network legacy has ameliorated
>the worst excesses of naked (neoliberal) depression?

I think recession was coined by the Roosevelt administration to describe
what happened in 1937 when the recovery of 1933-36 fell apart and the
economy fell back into slump, thanks in large part to a tightening of
fiscal and monetary policy in 1936. (Deficits! Loose money! Inflation!
Gads!). The blow to confidence was pretty sharp - was the Depression
permanent? - so the euphemism "recession" was meant to soften the blow.

There is a big difference between the two critters today. The unemployment
rate in the U.S. topped out at around 25% in the early 1930s; the closest
we've come since is half that. (No lectures, please, on the shortcomings of
official unemployment measures; I'm aware of all that.) Now even present
unemployment levels in the U.S. are scandalously high - 7.4 million in
June, by the official definition - but "depression" levels would be more
like 30-35 million.

Depressions also have a sticking power that recessions don't. A modern
garden-variety recession will respond to loose money and deficit spending,
but a depression won't very much. The average post-World War II U.S.
recession has lasted about 10 months, but the average between 1854 and
1919, which includes the great deflationary decades of the 1870s-90s, was
22 months. The heart of the 30s depression, Aug 1929-Mar 1933, lasted 43
months. But the killers of 1873-79 (65 months), 1882-85 (38 months) were
nothing to sneeze at either. Now *those* were depressions. Compared to that
the little 8-month downdraft of Jul 90-Mar 91 was a mere summer
thundershower.

Doug

--

Doug Henwood
[dhenwood at panix.com]
Left Business Observer
250 W 85 St
New York NY 10024-3217
USA
+1-212-874-4020 voice
+1-212-874-3137 fax




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