Thursday, December 15, 2011

The Long Depression, The Lost Decade, The Great California Slump

TIME Magazine coined the term "The Great Recession" for the economic period that began at the end on 2007. It was an effort to liken this recession (which is supposedly over) to The Great Depression of the 1930's, but just not so bad.

When the people who lived it as adults talked about The Great Depression, they generally seemed to say they didn't think it ended for them at least until WWII started in Europe in September 1939. So fundamentally, it was a 10-year time of struggle for many Americans, even though economists call the period of the first 43 months a contraction followed by a period of growth followed by another severe recession beginning in June 1937.

Many Americans are aware that the Japanese economy crashed in 1991 because of what is called the Japanese asset price bubble, and the Japanese initially referred to the period of 1991 to 2000 as The Lost Decade, but many now refer to 1991 to 2010 as The Lost Decades.

What most Americans are not aware of is what is known now as The Long Depression which began with the Panic of 1873 and ended about 1896 or 23 years, an economic collapse that was world wide, but most notably in areas that had gone through rapid economic growth from the Industrial Revolution such as Europe and the United States.

The Great Depression was relatively short as world wide depressions go, shortened because of a world war.

What we should be aware of from The Long Depression is in truth it began with a major economic collapse, followed by some growth in between a series of recessions. In fact the period was a sustained period of painfully slow growth with bumps and dips. As one economist who likens our current situation to that period notes:
New technologies and industries were being created. The telephone was invented, and the foundations of new industries based on the petrol engine and electricity were put into place. The people who got it right still made huge fortunes, and the workers in the right industries prospered. Overall, however, times were hard.
This brings me, then, to what I am calling The Great California Slump. Simply put, California has not been able to create enough new jobs for its growing workforce for two decades. From a worker standpoint, California's economy looks like this:

Simply put, for workers overall The Great California Slump began in 1990 and continues today. And the economist I quoted above feels that it could last 40 years, with some occasional ups and downs. The economy may grow slowly as international corporations generally increase output over the long term, but for workers the general direction will "feel" down in bad times and stagnant in good times.

And that is why we read in the Sacramento Bee  Public confidence in California falls as economy improves and why it appears that a revolution is going on with folks using initiative measure proposals as bullets.

I'll explore those proposals in my next post.

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