It's actually a bit daunting thinking through what a 21st century
depression might look like.
Our global economy continues to rocket ahead, growing to an
ever-larger size, but as they say, the bigger they are, the harder the
fall. And with gasoline shocks, natural disasters, terrorism,
technology bubbles, real estate bubbles, and just plain happenstance
rocking the economy on an irregularly regular basis, the whole thing
seems to often be teetering precariously on the brink
What would the whole mess look like in the event of an economic meltdown?
Let me attempt an answer by elaborating on the items I wrote already:
--People lose their jobs -- When the technology bubble burst in 2000,
it was not only tech workers who lost their jobs. Technology
companies drastically cut back on their advertising budgets as one of
their first ways of cutting costs. They also cut back on their
equipment spending, and soon, equipment manufacturers were also
cutting their advertising budget. My wife, who worked for a national
weekly magazine, sat nervously through round after round of layoffs,
as the magazine staff was cut to the bone. Finally, her turn came,
and the ax fell!
In an economic meltdown, this sort of scenario is not only repeated en
masse, in millions of households around the country (and many more
around the world!). But there's a sort of self-reinforcing negative
feedback loop at work. People get fired from their jobs, and cut back
on their consumer spending, which, in turn, causes other businesses to
curtail any expansion plans, so they stop hiring new people.
Not only are folks out of a job in a meltdown, but new opprotunities
rapidly vanish. The unemployed have real trouble finding any
opportunities to get re-hired in comparable jobs. They longer they
are unemployed, and the more desperate their personal finances become,
the lower they set their sights. If a former business executive has
to take a job greeting customers at Wal-Mart in order to get some
income, that's the job he'll take -- if indeed, such a job is
available at all.
--People tighten their belts, focus on essentials, postpone school,
dentistry, medical care and all sorts of other things -- This is
perhaps the major aspect of an economic meltdown that can make it so
damaging, both to the economy overall and to individuals.
In an economic meltdown, even people lucky enough to maintain stable
incomes are faced with a greatly increased degree of uncertainty --
Will I have a job next week? Will my spouse be working? Will my
income keep pace with inflation? So people faced with possible loss
of income begin feeling the same pressures and making some of the same
choices as those faced with an actual loss of income. They pare back
their spending. They postpone non-essentials, such as vacations, a
new car, or moving to a larger house, or taking that college course
they were interested in. And as more and more people make similar
economic choices, these multiple postponments only add to the growing
Those who are in truly tough economic straits have to make even more
draconian decisions -- postponing a trip to the dentist, even though
that back tooth is aching, or putting off taking the kids to the
doctor for their next round of vaccinations. These folks are
approaching an economic crisis that can lead to my next impact area...
--If things get really bad, then they fall into the underclass in
America that tries to live off the so-called safety net as best they
Economic hardship can put people, families and communities on a
slippery slope. Those that have lost their jobs may qualify for
unemployment -- a government payment to keep people afloat as they
seek new jobs -- but even where this is available, it is a temporary
measure and eventually lapses. Other types of government financial
assistance exist -- foodstamps, help with medical services, and there
are still some forms of outright welfare. But these assistance
programs are never enough to support most unemployed people in the
manner in which they were accustomed when they were working. Since
housing costs are such a major chunk of personal expenses, one of the
most dire impacts of economic meltdowns is the inability to afford to
stay in one's home or apartment, and be forced to move to lesser
accomodations -- or even into homelessness and reliance on
'soup-kitchen' type shelters.
All of these things take a huge psychological toll -- even for the
individuals and families that are still managing to squeeze by. There
is such a strong cultural association between government programs like
foodstamps, and the condition of poverty, that there's a great deal of
resistance to acknowledging a need for such a program for one's self
and one's family, and a tremendous sense of personal failure at having
to accept such a 'handout'. Which adds to....
--The stress of the situation can be awful, and can lead to an
increase in both personal unrest (breakdowns), family unrest
(violence) as well as social unrest (crime, riots).
The images coming out of New Orleans have made clear that which has
always been obvious, but which we tend to forget -- being poor is a
very tough way to live. Perhaps even tougher -- or maybe just a
different kind of tough -- is living in relative comfort for so long,
and suddenly being plunged into poverty from the impact of an economic
meltdown. The unarticulated assumption that "I/we will always be
OK...will always find a way to make due" gets shattered as people are
faced with loss of jobs and homes, the descent in bankruptcy,
destitution, and the despair that can come with all of that.
As the ranks of the newly-poor swell, and as the entrenched-poor
become even more desperate in their plight, the stresses create can
readily tear the fabric of family life and social cohesion. Family
members in crowded quarters snap at each other, and some of them turn
violent. Divorce -- or simply the unofficial scattering of a
once-cohesive family -- increases. Escape into alcohol or drugs
becomes more alluring, as does the illusion of security that can come
from gangs. Theft is more tempting, especially for those who feel
that the food/clothes/electronics or whatever, somehow should
rightfully belong to them. The combination of all these things leads
to a marked increase in violent crime.
It's not just individuals and families that begin to break apart.
Communities can respond this way as well. Cities loose their tax base
with which they provide citizen services; stores close down in poorer
neighborhoods, chased out by lack of spending power and crime;
communities at one time sympathetic (if only modestly aware) of the
poor in their midst become resentful as their ranks swell. The result
can be an organized acting-out in the sense of gangs, demonstrations,
organized crime. Or it can lead to more spontaneous outbursts...riots
and looting and unprovoked violence.
The stress is not only on the poor, though they certainly bear the
brunt. Even the well-off become disgruntled as the tenth homeless
person of the day approaches them for some spare change. And if the
approach happens to feel menacing rather than benign, then all the
more tension is created.
It's not a happy picture.
Nor is it a totally hypothetical one. Although "economic meltdown"
may not be an appropriate description for our national economy at the
moment, it certainly is an apt description of the way some of our
population -- and a good deal of the world -- live their day to day
I hope this is the sort of thing you were after...a few pages of
personal observation. It's always a special sort of challenge to
answer a relatively open-ended question.
Do let me know any comments you have.
But please do not rate this answer yet if you have any questions about
it, or would like anything in addition to the above. Just post a
Request for Clarification to let me know how I can assist you, and I'm
at your service.
Thanks, again, for giving me this interesting opportunity....