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Recession or Depression; Who Cares What You Call It?

By

Spadecaller

 

A tale, much favored by tour guides, is that Shakespeare was also making a joke at the expense of the Rose Theater, when he wrote the words, "What's in a name that which we call a rose. By any other name would smell as sweet." The Rose was a local river by his Globe Theater and is presumed to have had less than effective sanitary arrangements. The story goes that this was a joke about the smell. One whiff downwind from the "the Rose" was enough for anyone to discard the vanity of its name.  

 

The newspapers define a recession as a decline in the Gross Domestic Product (GDP), which persists for two or more consecutive quarters. Among most economists this is an unpopular definition because it ignores changes in the unemployment rate and fails to reflect consumer confidence.

 

The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) may provide a better way to find out if there is a recession taking place, but it too has its flaws. This committee analyzes the amount of business activity in the economy by looking at employment, industrial production, real income, and wholesale-retail sales. According to them, a recession commences at the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. By this definition, the severity of the fall, the period of decline, or its consequences to the unemployed remain irrelevant. Of course, there is no mention of the word depression by either the newspapers or the NBER.

 

Before the Great Depression of the 1930's any downturn in economic activity was referred to as a depression. The term recession was developed in this period to describe smaller economic declines that occurred in 1910 and 1913. This leads to a simple definition of a depression; it is an economic downturn that lasts longer and has a larger decline in business activity. So, to characterize the present economic crisis as a recession appears to be quite misleading, especially when one gets a whiff of the local river. 

 

What makes using the term"  repression" preferable?  Using it has certainly not aided consumer confidence nor has it softened the fall of the stock markets. Other than those in the middle class - many of whom are busy whistling in the darkness of the current economic crisis, we have a powerful group of corporate insiders who will go to any lengths to prevent a confrontation with those they have been exploiting over the past decade. Unfortunately for them, their efforts have failed. Hiding the depression like a pea under the walnut shell is no longer fooling the public.

 

Ostensibly, the word depression has been rendered obsolete. Many people during the last years of the Bush administration claimed that they were suffering financial losses of grave proportions, during which time the media, the administration, and Wall Street boasted of prosperity.  Even after the meltdown on Wall Street had begun and the failures of corporate giants were announced, the fans of this elitist economy were still bragging about the U.S. economy. Three days before John McCain allegedly suspended his presidential campaign and fled to Washington to rescue the nation from economic ruin, he announced, "the fundamentals of our economy are strong".

 

We are now learning about those who were prospering the most at the expense of a nation at war. Haliburton, Blackwater and the oil companies had a party at the expense of American taxpayers. Corporate executives plunging from Enron, AIG, City Bank, or Merrill Lynch with their golden parachutes revealed the great rift between Wall Street and Main Street.  Other than Bernard Madoff, who was hauled off to a federal jail after admitting he had swindled unsuspecting investors out of 65 billion, unethical and unregulated profit taking was ignored. We now know for certain that average Americans were not sharing in their so-called booming economy. Merrill Lynch's vice president, Peter Kraus, collected 25 million before Bank of America took over. According to these models of corruption, the unemployment lines, foreclosures, and food stamps are not reflections of the economy, nor were they worth the attention of mainstream media.  And according to the corporate owned media, Main Street just recently began to experience a "severe recession".  Obviously, they failed to consult with the 2.7 million households, who experienced foreclosures in 2007 or the 3million foreclosures of 2008. Ask the former homeowners or the unemployed if this is a recession or a depression.

The difference between a recession and depression has been most aptly described in this anonymous quote: "A recession is when your neighbor loses his job. A depression is when you lose yours." According to this realistic interpretation, many of us who remain untouched by hardship prefer to ignore the plight of those affected by the failing economy. It is this kind of self-centered disunity that has enabled many corporations to manipulate our government and pervert the American dream.  One good look at the current crisis is proof enough that this "dog-eat-dog - each man for himself" philosophy has not served our nation or the world well.

Today's economic meltdown is the antithesis of "the Great Society" President Lyndon B. Johnson once envisioned.  In the light of our present circumstances, consider his profound remarks:

For a century we labored to settle and to subdue a continent. For half a century we called upon unbounded invention and untiring industry to create an order of plenty for all of our people. The challenge of the next half-century is whether we have the wisdom to use that wealth to enrich and elevate our national life, and to advance the quality of our American civilization. Your imagination, your initiative, and your inspiratio will determine whether we build a society where progress is the servant of our needs, or a society where old values and new visions are buried under unbridled growth. For in your time we have the opportunity to move not only toward the rich society and the powerful society, but upward to the Great Society. The Great Society rests on abundance and liberty for all. It demands an end to poverty and racial injustice, to which we are totally committed in our time. But that is just the beginning. The Great Society is a place where every child can find knowledge to enrich his mind and to enlarge his talents. It is a place where leisure is a welcome chance to build and reflect, not a feared cause of boredom and restlessness. It is a place where the city of man serves not only the needs of the body and the demands of commerce but the desire for beauty and the hunger for community. It is a place where man can renew contact with nature. It is a place which honors creation for its own sake and for what is adds to the understanding of the race. It is a place where men are more concerned with the quality of their goals than the quantity of their goods. But most of all, the Great Society is not a safe harbor, a resting place, a final objective, a finished work. It is a challenge constantly renewed, beckoning us toward a destiny where the meaning of our lives matches the marvelous products of our labor.

The road to recovery always begins with the first step, which always requires a truthful admission. Is it not about time for Americans to put aside the phony rhetoric? Has not the time come for Washington politicians, the Wall Street cheerleaders, and the media pundits to take the first step - to admit that America, the land of opportunity, is experiencing a major depression? The only way to combat a problem is to first admit it exists. While a handful of this country's most wealthy citizens continue to describe the current financial collapse as a recession, millions of Americans are losing jobs, homes, and their dreams of a more promising future for their children. This nation needs a good dose of reality before we can truthfully assert that we are a compassionate nation dedicated to the prosperity for all its citizens.