This is written as the Dow is sinking almost 7% through about 9600, after a similar day on foreign markets. The judgment of investors isn’t the rousing endorsement of the bailout some had hoped for. And Floyd Norris passes on the following CNN poll result:
As you may know, the U.S. went through a depression in the 1930s in which roughly one out of four workers were unemployed, banks failed across the country, and millions of ordinary Americans were temporarily homeless or unable to feed their families. Do you think it is very likely, somewhat likely, not very likely, or not likely at all that another depression like that could occur in the U.S.?
Very likely, 21%
Somewhat likely, 38%
Not very likely, 29%
Not likely at all, 13%
Hmm. The 59% in the first two categories, think they’re headed for the mall and the car dealer and the Sunday open houses?
Time for some old-fashioned 1930’s stimulus: every day of unemployment by every willing worker is a day’s value creation lost forever. Forever. Not to mention underemployment. The good news in this state of affairs is that it’s occurring at a time when investment in the kind of thing government is good at buying, especially infrastructure, is just the ticket. It will never be cheaper to buy houses for transit right-of-way, and the construction workers not building tract houses and office buildings will never be more grateful for jobs.
This piece of good fortune is aligned, with more luck than we deserve, with a whole expensive shopping list of stuff we need to do to slow, and adapt to, global warming. This shopping list is a fantastic Sunday supplement insert of bargains, things that are such a great deal we should happily go into hock for them (unlike a house with two bedrooms for every occupant and a three-car garage). We need transmission lines to get electricity from where the wind blows to where people live. We need high-speed rail to connect the downtowns people are moving back to. We need nuclear power plants. We need a lot of expensive research on stuff like vehicle batteries, geoengineering, and carbon capture and storage. We need a lot of cheap research on how to teach people that driving a big car is just rude.
Of course, with credit locked down and the private sector on a gurney with a drip, these are only possible if government steps in. If that happened, it would mean that the smug philosophers of “small government and low taxes forever and no matter what” would have been wrong. If it happens in an Obama administration, it would probably mean that the opportunities for no-bid cost-plus ripoffs by friends of imbecile appointees would be greatly constrained. Perhaps these are good reasons to hunker down and have the depression; a slogan is a terrible thing to throw away just to save an economy, and anyway the people who matter have already socked away enough to be set for life.
In fact, a lot of nice things will be cheaper with breadlines keeping the labor force docile…now that I think of it, a carpenter building a school is one less waiter bringing a drink to poolside.