Will It Be Fair To Refer To The Coming Great Depression As "The Trump Depression?"

I was born in 1948. My grandparents used to tell me about the Great Depression. There's no one alive today who was a sentient enough being at the time to remember it first hand. And many Americans under 40 relate to it about as much as they relate to the Battle of Yorktown. Yesterday, both the New Yorker and New York Magazine published vital pieces on the Great Depression and what it has to do with us in 2020-- Susan Glasser for the New Yorker and Eric Levitz for New York. Hint: our White House is occupied by Donald J. Trump.

"In September 2006," wrote Levitz, "Nouriel Roubini told the International Monetary Fund what it didn’t want to hear. Standing before an audience of economists at the organization’s headquarters, the New York University professor warned that the U.S. housing market would soon collapse-- and, quite possibly, bring the global financial system down with it. Real-estate values had been propped up by unsustainably shady lending practices, Roubini explained. Once those prices came back to earth, millions of underwater homeowners would default on their mortgages, trillions of dollars worth of mortgage-backed securities would unravel, and hedge funds, investment banks, and lenders like Fannie Mae and Freddie Mac could sink into insolvency. At the time, the global economy had just recorded its fastest half-decade of growth in 30 years. And Nouriel Roubini was just some obscure academic. Thus, in the IMF’s cozy confines, his remarks roused less alarm over America’s housing bubble than concern for the professor’s psychological well-being. Of course, the ensuing two years turned Roubini’s prophecy into history, and the little-known scholar of emerging markets into a Wall Street celebrity."

Roubini isn't buying onto the nonsense about a V-shaped recovery. He sees an "L-shaped depression," although he expects thing to get better before they get worse. "He foresees," continued Levitz, "a slow, lackluster (i.e., 'U-shaped') economic rebound in the pandemic’s immediate aftermath. But he insists that this recovery will quickly collapse beneath the weight of the global economy’s accumulated debts. Specifically, Roubini argues that the massive private debts accrued during both the 2008 crash and COVID-19 crisis will durably depress consumption and weaken the short-lived recovery. Meanwhile, the aging of populations across the West will further undermine growth while increasing the fiscal burdens of states already saddled with hazardous debt loads. Although deficit spending is necessary in the present crisis, and will appear benign at the onset of recovery, it is laying the kindling for an inflationary conflagration by mid-decade. As the deepening geopolitical rift between the United States and China triggers a wave of deglobalization, negative supply shocks akin those of the 1970s are going to raise the cost of real resources, even as hyperexploited workers suffer perpetual wage and benefit declines. Prices will rise, but growth will peter out, since ordinary people will be forced to pare back their consumption more and more. Stagflation will beget depression. And through it all, humanity will be beset by unnatural disasters, from extreme weather events wrought by man-made climate change to pandemics induced by our disruption of natural ecosystems."

Levitz's interview with Roubini is something you should read unless something like this will keep you up nights:

There’s a conflict between workers and capital. For a decade, workers have been screwed. Now, they’re going to be screwed more. There’s a conflict between small business and large business.

Millions of these small businesses are going to go bankrupt. Half of the restaurants in New York are never going to reopen. How can they survive? They have such tiny margins. Who’s going to survive? The big chains. Retailers. Fast food. The small businesses are going to disappear in the post-coronavirus economy. So there is a fundamental conflict between Wall Street (big banks and big firms) and Main Street (workers and small businesses). And Wall Street is going to win.

Not scary enough for you? How about this? Is this the kind of thing you can lose sleep over?

You’re going to start having food riots soon enough. Look at the luxury stores in New York. They’ve either boarded them up or emptied their shelves,  because they’re worried people are going to steal the Chanel bags. The few stores that are open, like my Whole Foods, have security guards both inside and outside. We are one step away from food riots. There are lines three miles long at food banks. That’s what’s happening in America. You’re telling me everything’s going to become normal in three months? That’s lunacy.

The Republicans have lost their minds entirely if they thing that Donald Trump and the crew of misfits and sycophants he's hired to run the government are the right people to save the country. And the Democratic electorate is just as clueless, passing on Bernie and Elizabeth in favor of Status Quo Joe, who only looks "good" in comparison to Trump but is certainly not up to this job:

The market, as currently ordered, is going to make capital stronger and labor weaker. So, to change this, you need to invest in your workers. Give them education, a social safety net-- so if they lose their jobs to an economic or technological shock, they get job training, unemployment benefits, social welfare, health care for free. Otherwise, the trends of the market are going to imply more income and wealth inequality. There’s a lot we can do to rebalance it. But I don’t think it’s going to happen anytime soon. If Bernie Sanders had become president, maybe we could’ve had policies of that sort. Of course, Bernie Sanders is to the right of the CDU party in Germany. I mean, Angela Merkel is to the left of Bernie Sanders. Boris Johnson is to the left of Bernie Sanders, in terms of social democratic politics. Only by U.S. standards does Bernie Sanders look like a Bolshevik.

In Germany, the unemployment rate has gone up by one percent. In the U.S., the unemployment rate has gone from 4 percent to 20 percent (correctly measured) in two months. We lost 30 million jobs. Germany lost 200,000. Why is that the case? You have different economic institutions. Workers sit on the boards of German companies. So you share the costs of the shock between the workers, the firms, and the government.

Meanwhile Susan Glasser wants to remind us that the GOP is all about diversion. They want the electorate to think about anything rather than the "side"-effects of the pandemic. "In recent days," she wrote, "the Republican-controlled Senate has not considered any major legislation related to the virus and the historic havoc it has wrought on the country’s public health and economy. Nor does it have any current plans to do so, leaving the fate of a three-trillion-dollar relief measure passed by the Democratic-controlled House last Friday uncertain... Trump right now is mass-proliferating diversions, from last week’s spurious 'Obamagate' to this week’s threat to withhold federal funds from Democratic-led states that make it easier for voters to cast ballots by mail this fall. If it seems as though Trump is generating more controversies than usual these days, that’s because he is. He is a superspreader of distraction. It’s an excellent way to make one forget, at least for a while, about the death and economic destruction currently rampaging across the country."

Of course Trump is trying to distract. The emerging politics of the pandemic are not good for him, nor are they likely to get better. They have recast the fall election as a referendum on Trump’s basic competence to lead the country through a once-in-a-century convergence of crises. During the pre-pandemic impeachment era, Richard Nixon was the inescapable historical point of comparison for Trump’s corruption-ridden Presidency. Now it is Herbert Hoover. Running for reëlection after the stock market crash of 1929 and three failed years of trying to stop the Great Depression, Hoover promised Americans that “Prosperity Is Just Around the Corner.” Upbeat predictions amid bread lines didn’t cut it, and Hoover lost badly. The brutal political reality of running for another term while the country is experiencing mass unemployment is one that almost no President can overcome. In fact, the last time an American incumbent successfully won during a recession was in 1924.

Then again, Hoover’s campaign slogan seems like a winner today compared with the clunker Trump has been trying out in recent days: “Transition to Greatness!” On May 7th, Trump débuted the phrase, saying at a White House appearance with Texas Governor Greg Abbott that, while the economy was cratering now, he expected that late this year-- preferably, right around the November election-- it would begin to “transition into greatness.” A fantastic 2021 would follow. “I think next year we’re going to have a phenomenal year,” the President insisted.

The line stuck with him. By the next day, at an appearance with Republican members of Congress, Trump was calling it his new campaign mantra, claiming to have invented it on the spot (although he had used the same phrase just the day before), and insisting it was a more brilliant advertisement for his reëlection than anything the professionals could come up with. “It’s a great term. It just came out at this meeting,” he told the Republicans as reporters looked on. “That’s right. It came out by accident. It was a statement and it came out and you can’t get a better one. We can go to Madison Avenue and get the best, the greatest geniuses in the world to come up with a slogan, but that’s the slogan we’re going to use: ‘Transition to Greatness.’ And it’s starting right now.”

I suppose it’s not a surprise, more than three years into his Presidency, that Trump will lie about anything, even the coinage of a campaign slogan, but on simple grounds of political malfeasance alone this one seems to be an epic Presidential fail. It’s safe to say that nobody ever got reëlected to anything by promising a “transition.” You would think the guy whose 2016 success was aided by a catchy campaign slogan on a red baseball cap would know a dud when he sees one. Politicians win by attacking the other team, as Trump did so effectively four years ago, by ripping off Ronald Reagan’s 1980 promise to “Make America Great Again.” It is a lot harder to do that if you’re an incumbent, and harder still if you’re the incumbent at a time of epic death and economic suffering. If the record you’re running on is so bad that your own slogan vows to do better next time, it’s hard to envision winning. Yet that is exactly what Trump is selling these days. “TRANSITION TO GREATNESS,” Trump tweeted this Monday, at 4:39 a.m. On Tuesday, emerging from a lunch with Senate Republicans, he explained once again his theory of the case. “It’s a transition to greatness,” Trump said. “Above all, next year, you are going to have a tremendous year.” On Wednesday, he promised, on Twitter, a “normalization!” that somehow, miraculously, will take America out of this mess, “now that our country is Transitioning back to Greatness.” Madison Avenue is surely grateful that Trump is claiming responsibility for this at least.

The U.S. is reporting 95,379 deaths today (Friday), 1,116 more death since Thursday. By Memorial Day the U.S. will be very close to the gruesome 100,000 mark, most of whom should not have died, had our political leaders-- foremost Trump-- done their most basic jobs of protecting the country. This week presidential historian Robert Dallek, writing for Time, reminded his readers that "Herbert Hoover, who won the election of 1928 and had a reputation as a brilliant mining engineer and highly successful businessman, likewise struggled to respond to the stock market crash of 1929 and economic collapse beginning in 1930. The problem for Harding, Hoover and the Republicans who controlled Congress in the 1920s was an unyielding faith in free market capitalism. Convinced that the markets would automatically turn up, as they had in 1921, Hoover repeatedly urged the country to believe that prosperity was right around the corner. With conditions worse than ever and unemployment reaching 25% of the work force in 1932, Hoover lost the presidency in a landslide to New York Governor Franklin D. Roosevelt... Roosevelt’s leadership fostered renewed hope, with expanded job opportunities provided through public works projects, including dam-building and flood control that protected the environment, as well as projects for artists and writers. As important, his administration humanized America’s industrial economy with Social Security to insulate seniors from hardships, unemployment insurance and minimum wages and maximum hours that gave laborers unprecedented protections from market swings. On the strength of that success and his leadership in World War II, he won a record four presidential elections." Stuck with a status quo nothing as the Democratic nominee, what we need to do now is elect as many progressive as we can to Congress-- like the men and women you'll find listed by clicking on the thermometer on the right.

Trump, who is no student of history, says that he has presided over the best economy ever in the United States and accomplished more in his first year and a half in office than any previous occupant of the White House. Never mind that the coronavirus has triggered a precipitous downturn with over 1.4 million Americans infected and more than 89,000 fatalities. In the beginnings of a reelection campaign in which Trump has to explain away nearly 15% unemployment, the worst since 1933, he is predicting a third-quarter resurgence and a fourth-quarter expansion that will carry over into next year.

...Certainly no one can blame the pandemic itself on Trump, but he has overseen a slow and shortsighted response to the infectious virus. The Washington Post has cited more than 18,000 questionable statements he has made, including numerous outright lies. His credibility problem has played a significant part in making him the first president since polling began in the 1930s to go through almost four years without achieving 50% public approval-- evidence that many people cannot square his rhetoric of alleged accomplishments and self-congratulation with public realities.

There is no question but that the country is facing a national crisis demanding an imaginative response like FDR provided with his New Deal. We can’t simply talk our way out of this challenge by ordering cities and states to reopen public businesses without an escalating death toll. The lackluster response to the economic problems of the 1920s shows just how cheap talk is in this kind of situation: leaving massive national problems to work themselves out without serious federal intervention only made things worse.

...Today, Americans are once again facing the consequences of a failure to act, and a mistaken belief that a miracle solution is on its way. The past has already shown that there is a better way forward-- but as the coronavirus crisis continues, it only seems more likely that FDR’s is not the history Trump plans to repeat.