Pundits whose bearishness had been vindicated predicted we were doomed to a long, painful bust, with cascading failures in sector after sector, country after country. In a widely cited essay that appeared in The Atlantic this May, Simon Johnson, former chief economist of the International Monetary Fund, wrote: "The conventional wisdom among the elite is still that the current slump 'cannot be as bad as the Great Depression.' This view is wrong. What we face now could, in fact, be worse than the Great Depression."Another Great Depression??... Lest you think any critique I might put forth now is purely the product of 20/20 hindsight, here's what I had to say about comparisons to the Great Depression back when Johnson was finishing up his essay for The Atlantic:
... there is another issue that can be resolved much more easily. That is the extent to which the nation's current economic predicament compares to the Great Depression.OK, so Johnson was talking about global economic turmoil, and my comments are focused on the United States. But the point is the same. The "Great Depression" that matters is the one that has been surrounding the Global Economic Center for the past century--that this to say, the economic periphery inhabited by the majority of the world's population. As Zakaria's essay does a good job of summarizing, what the economic crisis of the past year and a half actually did was to sink the peaks (rich countries) and raise the valleys (formerly poor countries) somewhat in our still very uneven global economic landscape.
Here's the answer: There is no comparison between the Great Depression and today's economic crisis.
Put differently: There is NO COMPARISON between the Great Depression and today's economic crisis. To compare the two is actually to insult the memories of our parents, grandparents, or great-grandparents, as the case may be, who endured that era of hardship and struggle.
... "Poor" in the world today doesn't mean that your 401K just lost 60% of its value. "Poor" means that your children have a far better chance of dying of diarrhea than they do of going to college. Whatever difficulties most Americans may be facing at the moment, they in no way compare with the hardships faced either by our forebearers during the Great Depression, or by the majority of people elsewhere in the world today whose daily wages amount to less than the price of a latte.
At home, the putting greens may be closed and our golf clubs may have been repossessed, but we still have a pot to piss in. Let's be thankful and start to build the Next America, rather than wasting our time lamenting the demise of the last.
So, if the global financial crisis served to advance global equity, then no worries? Not quite. But don't be surprised if people in the world's poorest places have as much sympathy for our "suffering" since the Fall of '08 as we do about certain former purveyors of Collateralized Debt Obligation now forced to downsize in Greenwich, CT...