US economy - a silver lining?
Having for several weeks now read much gloomy material about the state of the American economy, it seems to me that some adjustment of the perspective is in order.
Yes, there is a recession. Many people, particularly those who have had pink dismissal slips just before Christmas, bitterly call it a depression.
Yes, it is apparently the deepest economic recession since 1945.
Yes, people who get laid off in the United States can expect less unemployment and welfare support than do working people in the advanced countries of northern Europe.
Yes, there is real human distress in the US right now. A powerful case can be made that national, state, and local governments should be doing more than they are doing to provide ''safety nets'' under those hurt the most, should be doing much more than they are now to take people from declining and obsolete industries and retrain them for employment in the new and growing industries. The governments certainly should be doing more than they are now to help people to move from declining communities to growing communities, and to relieve teenage black unemployment.
But having said all that, and adding that there is no consolation for the family whose livelihood has been washed away by economic change or bankruptcy, it should be noted that there are other features in the present American economy.
Bad as the present recession is, it is less than half as bad both economically and humanly as was the Great Depression which began in 1929 and lasted until the war industries boom got going in the late '30s. Unemployment during the Great Depression ran at around 10 million Americans. But the US population in 1929 when the depression began was only a little more than half what it is today. It was 122 million then. It is around 225 million (estimated) today. So the rate of unemployment is roughly half what it was then.
During the Great Depression there was no national safety net under the unemployed. The federal government did not even consider that it had any duty or obligation to do anything about poverty or misery. That was deemed to be the proper sphere of local communities and the charity of the wealthy.
Add that the stock market crash of October 1929 seemed to have a paralyzing effect on industrial and corporate management. Bankruptcy reached epidemic proportions. Much of American business and industrial management simply gave up.
There is no such panic or widespread failure of management today. The general assumption, based on experience since World War II, is that things will begin to turn up in the spring or sometime during the next summer and that this is another passing phase which will not last long.
Add also that the federal government, in spite of all the various cutbacks in budgets for welfare, has done little or no cutting back in subsidies and welfare for vast segments of the industrial and agricultural community. Profits for growers of tobacco, sugar, peanuts, and dairy products are all considered to be essential national interests. So too are many of the favorite congressional pork barrel projects such as the Tombigbee waterway and the Clinch River breeder reactor.
There will be no pink slips for people employed on the Tombigbee canal or similar projects. The highway construction industry will continue to build unwanted superhighways and unwanted superbridges. Nor will there be pink slips for people working in defense industries - provided Congress continues to support Mr. Reagan's defense program - which so far it does.
Unemployment is limited to certain areas and activities. The worst sufferers are the automobile and steel industries and regions. Other parts of the country seem to be recession-proof. New England and the Sunbelt are examples.
Reaganomics is not going to end the inflation and rebuild the American economy without pain. Supply-side economics cannot do all that was promised and also balance the budget. (Those are two truths which we have learned over the last 12 months.)
There will be more economic and human distress until all the obsolete factories and mills and activities in the US have been retired and replaced by new activities and new and growing industries. Americans are in an industrial transition phase which almost inevitably causes unemployment and much difficult relocation of labor.
But we are moving on through the transition. The more obsolescence is squeezed out of the economy the sooner the recession will end and be replaced by a modern economy. Politics will slow the process, but it will go on. There will be anguish. But the US has been through far worse recessions than this, and come through stronger than ever, as it will this time.