As we plunge into a new great depression, happy days appear to be far off. Despite brave talk of the economy “snapping back” when shelter-in-place restrictions are fully lifted, precedent says otherwise. The number of small businesses that are likely to not survive the pandemic’s mass closures seem another grim augury.
For folks in the United States, an added factor is the spectacularly incompetent Trump administration, headed by an ignorant egomaniac completely absorbed in handing all responsibility elsewhere and his, if possible, even dimmer son-in-law, the world record holder for being in over his head. Switching overnight from denying there was any problem at all to predicting high death tolls so as to take credit if actual deaths prove to be somewhat less to ignoring the advice of disease-management experts, it is hard to imagine anybody worse in the White House. Although it must be admitted that as long as Mitch McConnell is around, crowning the most malevolent person in Washington will never be a clear-cut choice.
Denying the reality of a crisis and then pronouncing it over isn’t unique to Trump. I remember the recession that hit during the Bush I administration; George H.W. Bush went months claiming there was no recession, right up to one Friday, then the following Monday announced the recession was over. Shortest recession in history — it lasted only a weekend. But as much as the Bush family purports to dislike Trump, they must have a little bit of a rooting interest because the Trump administration has displaced the Bush II/Cheney administration as the worst ever.
With the pandemic bringing about Great Depression-level unemployment rates in three months that took three years to reach after the 1929 stock-market crash, what does the rest of 2020 look like? History does not repeat itself so neatly, but the downturn that stretched across the 1930s with only incremental improvement doesn’t provide a hopeful example. Nor does the long “jobless recovery” from the 2008 economic crash or the Reagan recession of the 1980s.
Wherever you are reading this column, difficult times likely will remain. Unemployment was high throughout the 1930s in the capitalist countries, but with the possible exception of Germany, the crash of 1929 hit hardest in North America. U.S. unemployment bottomed out at 24.9 percent in 1932 and at an estimated 30 percent in Canada in 1933. By 1932, Canadian industrial production was 58 percent of what it was in 1929 and U.S. production had declined by a similar amount.
Three years of cascading economic collapse wasn’t going to reverse itself overnight and certainly didn’t. By 1939, U.S. unemployment was 17.2 percent — and that was with the New Deal and programs such as the Works Progress Administration in place. Canadian unemployment is harder to determine because the Canadian government didn’t begin keeping that statistic until the early 1940s. One way we might extrapolate the unemployment rate is to use the statistics gathered by trade unions. In 1932, Canadian trade unions reported 22 percent of their members were out of work. If we assume the same ratio of trade union unemployed to overall unemployed, then we can estimate the 1939 Canadian unemployment rate was perhaps 13 percent.
It was the massive government spending to win World War II that brought the North American economies back to life. Worry about deficits went out the window thanks to the existential threat of fascism. The next peak of U.S. unemployment was 10.8 percent in 1982 during the Reagan recession; it took seven years for that figure to halve. Canadian unemployment peaked at 13 percent in 1982 and took until 1988 to decline to below 8 percent.
What this history tells us is that we are going to be in a period of high unemployment for some time. It would be foolhardy to predict how long a recovery will take this time given the unprecedented nature of 2020’s plunge into depression, including the steepness of the economy’s descent, but the mantra of the Trump administration and its enablers that we’ll have a so-called “V-shaped” downturn with a rapid return to normality has no precedent. And no basis other than wishful thinking — this is a White House that believes if you yell loud and stamp your feet, that makes it so.
Compounding all this is that we were overdue for a recession. The pandemic, while certainly making the downturn steeper and deeper than it would have been otherwise, should be seen as the proximate triggering factor, not the ultimate cause.
Shoveling piles of money at big capital while giving crumbs to small businesses and local governments hasn’t, and isn’t, going to bring the economy back to life.
Even if Trump is voted out of office, the neoliberal Joe Biden isn’t likely to offer more than tepid help. That voters in the U.S. are again faced with a choice of two miserable alternatives speaks volumes to the system’s inability to find solutions to fundamental problems thanks to the death grip of capital. Justin Trudeau has already shown himself the Obama of the North, so not much help is coming to Canada, either. Regardless of who is in what office, an irrational economic system is only going to provide more irrationality and misery.