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Depression, Recession, Downturn—Whatever

February 17th, 2009 - 12:16 pm

But back to that one quote. He said—and although it has been almost 40 years ago I remember it verbatim—“I guess the Depression was not all that bad if you had a job”. Of course, he didn’t mean farming raisins, whose prices had crashed from around $300 a ton to about $30 (he later told me he had not made a profit from 1924 until 1942). Rather, he knew Post Office workers, teachers, and railroad people who had secure jobs with steady income. And as he tried to explain, while his income had dived by 90% and most of the packers and shippers had gone broke, others employed perhaps only took a 10% cut. And because suddenly everything from gas to food to rent was dirt-cheap, the 75% who had jobs survived in good fashion (“good” meaning far better than current conditions in the former Third World in Africa and Latin America). Of course, he mentioned that no one had any of the opportunities present in the 1970s, but his point was that there was more to the Depression than one thinks; and while he had suffered terribly not all those in town had.

I was reminded of all that the other day. I rode a bike by dozens of MacMansions in Fresno—all up for sale for about $400,000, way down from their original $700,000, and thought “They are still too high—who can come up with $80,000 cash for a down payment, and another $2,000 plus per month payment?”

Things seemed pretty bad as I counted over 100 ‘For Sale” signs in a mere five mile stretch. I collated my own status. The equity on the farm is way down. I figure I lost about the last 5 years of 401(k) contributions— omnis effusus labor as Virgil says of Orpheus in the Georgics or as my favorite singer Mark Knopfler sings: “And if it’s all for nothing. All the road running it’s been in vain.” The Tribune Media outlet for whom I write a weekly syndicated column has declared bankruptcy, and some of the payments have been reduced and metered through a federal bankruptcy judge. Invitations for both public speaking and free-lance writing are way down, and compensation is reduced. Book advances in New York are either nonexistent or depressed. We are facing many cuts here at the Hoover Institution, given the natural reduction in the endowment. Until recently I was up to well over $10,000 in owed money by various groups for whom I have written or spoken for, but who have not paid. Farm prices are going back down, and the rent (I now lease out my 45 acres) scarcely covers the taxes, irrigation fees, insurance, and infrastructure maintenance. Some members of my family are either out of work or worried they soon will be. So in some sense, whatever we call the downturn is very real.

Yet like 93% of work-age Americans I still have a job, and thus, as my grandfather reminded me of others in town, things for those still working are not catastrophic. Gas is way down—indeed the country is saving hundreds of billions of dollars in reduced oil importation fees as a barrel crashed from $150 to below $40 (some stimulus!). Interest rates are coming down. Food is lower. Propane and natural gas are cheaper. For those who can meet a $500 or so monthly payment, there are real steals on cars. I get phone solicitations to buy everything from washers to frozen steaks in bulk. I saw a used boat the other day on the way to the mountains whose ridiculously low price did not seem real? If any young people have jobs, housing is finally affordable—and getting cheaper.

So what are we in? Mostly a time of psychological depression and waiting—but hardly a depression as my grandfather knew it, when he once bragged to me that for two years they had eaten everything—poultry, eggs, milk, vegetables, fruit, juices—but bread and coffee from what they grew and raised.

What we are talking about is a reduction in excess, not mass deprivation. Our worries over foreclosure are really about that 5-10% of the home owning populace that came into their own, when ownership rates rose from about 58% of the population to over 62%, and who often bought homes too large under dubious circumstances, predicated on expectations of always rising equity.

So fat is the United States, that things can get a lot worse before we are back to 1933. My grandfather’s final advice as we would end these drives? “Be sure to get a job in town—or better yet two—just in case those times come back…”

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