The (Potential) Effects of the Recession: What Might Happen; What We Might Do About It

Social and Political Changes

The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.

See: How a New Jobless Era Will Transform America

The crash of 2008 continues to reverberate loudly nationwide—destroying jobs, bankrupting businesses, and displacing homeowners. But already, it has damaged some places much more severely than others. On the other side of the crisis, America’s economic landscape will look very different than it does today. What fate will the coming years hold for New York, Charlotte, Detroit, Las Vegas? Will the suburbs be ineffably changed? Which cities and regions can come back strong? And which will never come back at all?

See: How the Crash Will Reshape America

The Economy

Over a longer time-horizon, we will probably experience a global economic boom, based on prospects in emerging markets.  With our current global financial structure, this brings with it substantial systemic risks

See: Revised Baseline Scenario

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

See: The Quiet Coup

The crash of 2008 continues to reverberate loudly nationwide—destroying jobs, bankrupting businesses, and displacing homeowners. But already, it has damaged some places much more severely than others. On the other side of the crisis, America’s economic landscape will look very different than it does today. What fate will the coming years hold for New York, Charlotte, Detroit, Las Vegas? Will the suburbs be ineffably changed? Which cities and regions can come back strong? And which will never come back at all?

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  • 18channels

    I am fascinated that we discuss the loss of a particular way of life as though we had a right to it in the first place. I don't wish ill on the national economy. But I feel we were already living on borrowed time in this regard…when the framework is unsteady, the drapings will fall away.

    • Jeff

      First, I don't think there was any intention to portray a particular way of life as a right. However, certainly one point is that there are much much larger forces at work which we have no control over. Yet these forces have enormous repercussions in the short and long term. Second, and I apologize for pulling out the "age" card on you, but I remember what life was like before we were brainwashed into thinking that we were NOT entitled to a good job and good wages. After all, if labor (blue collar or white collar) created the wealth, then it was only right to share that wealth. It was called sharing in the American dream. Yet there has been a relentless assault since the 1980s to demolish the middle class and we are seeing the fruits of that. Finally, these articles can be seen as a warning that if we don't act…if we don't do something to alter the current path…we can expect life to be nasty, brutish and short. (And the way things are going…it will also have no health insurance.)

      • Judy

        To second what Jeff is saying (not that I, too, am old or anything like that) — when I hear the phrases “the American dream” and “American way of life,” they speak more than anything else of the assumption my grandparents made that their children’s lives would be better and more filled with possibility than their own. That’s why they scraped up whatever they had to, to come to this country. For them, it was true. In turn, my parents assumed the same would be true for my brothers and me. And it started out that way. But I agree with Jeff, somewhere in the 1980s (partly thanks to oil embargo and the rest thanks to the Reagan, the spokesman for a relentless assault on middle class values and on labor, the only protector of middle-class wages for blue collar jobs), that trajectory started to sputter and die. I think it will leave a worse world in its wake. Not just for us, but for everyone who thought America showed the way to a better future.

        If we let it happen, we or our children will wake up someday in the kind of place our grandparents left (if it hasn’t happened already). Where, then, will we be able to go, to look for the formerly-American dream? China?? I don’t think so.

  • Katy B.

    Oh dear, yet again I was unclear…I just mean that in general it seems like a lot of people have an expectation that things will and should go back to how they “were” before the recession hit. Problem is, our now extinct ability to consume and consume was built on a mountain of debt and indeed a destruction of the middle class. I was raised in a third generation union family…so I totally hear you. I worry that many of my fellow Americans don’t seem to notice a likely need for moderation, new tactics…and instead focus on when things might get back to the “normal” at any cost…

    • Jeff

      Ok…we're in complete agreement.
      [Rant Begins Here]
      We can't go back to the pre-recession time and we shouldn't want to. It was based on financial hocus-pocus that had no connection to reality and has helped to put us in the position where we are now. The articles I flagged are clarion calls. Unfortunately, the country seems too enamored with Fox "Faux" News, the latest machinations of the Teabaggers and its head mistress from Alaska, and whether Brangelina is staying together or breaking up. We should all be rioting in the streets, protesting against those who have turned us into a banana republic. But as the famous Murray Lerner used to say (he was my 7th grade social studies teacher): "The masses are asses."

      One point that wasn't really raised in these articles is that, whatever we thought the world was like BEFORE this recession, when we come out of it, it will be a different world. The rules of the game will be different. How we make money will be different. I've lived through three (four?) of the boom-bust periods. Each time, when the boom returns, the economic rules have changed. By the time the little people (that's us) figures out how to make money with the new rules, the system comes to a crash, Wall Street falls apart, a number of nameless financiers make off with billions of dollars and, to make everyone feel better, we find someone like Michael Milken or Bernie Madoff who we can blame it all on and use them as a target for our anger.
      [Rant Ends Here]

      I'll end this post with My Daily Prayer:

      Dear God. I am an atheist. I really want to believe in you so, please God, prove to me that you exist and I will worship you forever. All you need to do is smite the Republicans and the Teabaggers. If you are too busy, then just smite Glen Beck and Rush Limbaugh. Amen.

      • betsy davenport, phd

        BEST prayer, evr.

    • Jeff

      Thought you might find this interesting:

      These days, black humor is a much better refuge than hope. Otherwise, resignation, if not despair, seem the only rational responses to a degraded American political system that’s unable or unwilling to right the economy, restore civil liberty and the rule of law, or reform unaffordable, inefficient, and inadequate healthcare institutions (to name just a few major challenges.)

      The Democratic majority is splintered, unable or afraid to govern, often lacking the courage of its professed convictions. The Republican minority is in thrall to angry, far-right ignoramuses: two-thirds of self-identified Republicans believe or are open to believing that Barack Obama is ‘a racist who hates white people’; more than half believe or are open to believing that he ‘wants the terrorists to win’, according to a recent poll.

      From: The retarded state of American politics

  • Jeff

    A friend just sent this to me:… It is an absolutely BRILLIANT analysis of Obama and explains why the Obama we have is NOT the Obama we voted for.

  • Ellen

    I have read Joseph Tainter's "Collapse of Complex Societies" and find it strangely comforting. He sort of cuts through the usual hocus-pocus explanations of why advanced civilizations collapse, and manages to produce a very solid explanation which is scalable to any kind of society (from a family to an empire). He talks a lot about the mechanisms of how advanced civilizations eventually become unable to cope with their own complexity, which oddly makes me feel better because I have such trouble coping with complexity myself on my worst days. In a way, we're all living beyond our means, our energies overtaxed. Tainter points out that for most of human history, human societies were far less complex (hunter-gatherers or maybe some small-scale agriculture) and that complex societies like our own are actually historical aberrations or outliers. In Tainter's view, collapse is a reasonable coping response to too much complexity… which again, also makes me feel better when I crawl into bed right after coming home from a busy, detail-infested day that always seems about four hours too long. Conserve your energies, folks, and don't sign on to the rat race. It's really not going anywhere in the long run.

    • Jeff

      Interesting way to look at the issue and I could definitely see how complexity can be a causal factor. Taleb (author of "The Black Swan" See: ) argues that our economic collapse, for example, is in part a result of a system that became too large and too complex. Investors really didn't understand such things as CDOs but they were still betting the house on it. (Pun sort of intended) However, for Taleb, and I agree with him on this, the answer to complexity and what we've now termed "Too Big To Fail" is to have smaller structures – like smaller banks – and investment vehicles that people can understand. (Warren Buffett has said "Investment must be rational; If you don’t understand it, don’t do it. –… )

      For Taleb, positive change would come from mini-failures – such as a small bank failing – that don't take down the entire system. It allows a measure of collapse but also the possibility of new players – and therefore, new ideas – to come to the foreground. The problem that we have now is we understand that a deep complexity exists in many of our current systems – banking; environment, etc. – and we have a pretty good idea as to how to approach it…BUT…entrenched powerful interests do not want to change the status quo since they are currently benefiting from the situation as it is.

      Bottom line: complexity may bring the house down but that is a result, in part, of the unwillingness of the powerful to allow for flexible adaptability to a changing situation. They would prefer to keep things as is – as short sighted as that may be – because they are uncertain as to where they will end up, economically and politically speaking, in the long term.

      • betsy davenport, phd

        There is investing (should be done only if you understand it), and there is gambling. And gamblers prefer to gamble big, and with other people's money.

  • Scott Hutson

    A recent class I attended in order to become an E.P.A. Certified Renovator is just another example of the contradiction, that the federal government has FORCED me to evaluate. (BTW I am now certified). Once again I am torn between the Moral,Legal,and Economic. <>Moral=This certification is specifically for Lead Based Paint containment.( when replacing windows and/or doors in my case). We already know that Lead can do permanent damage to the brain.(EPA claims ADD among other things, but thats another topic). Legal= For any infraction(by EPA rules)there will be a $34,000,( yes thats A THOUSAND) fine,and there could be several individual fines on just a door if inspected by a EPA guy that maybe just dosen't like the way I look at him.(welcome in corruption!). Even the man teaching the class,pointed that out. So I don't even have to explain the economics, but I will a little. Small business's such as my own could be destroyed=jobs! .

    "That's the way the world goes round" John Prine song.

  • Scott Hutson

    Btw.I had to erase the first half of that last comment, it said too long. I pointed out why I can't debate or pick a side. Also I debunked the myth of fair and balanced self proclaming media. It was pretty good, but I think I hopefully got the point across about One hand tries to do what the other hand tries to do, only there's a 3rd hand that tries to grab hold of both. Uncoordinated destruction ensues.

    • Jeff

      When that happens…just post the comment in two pieces, i.e., two separate comments.

    • Scott Hutson

      Here is another example of how things have a way intruding on my political views, right here at home……I live out in the country, in a very laid-back peaceful and private atmosphere. I am only 1/4 of a mile from a “town” named Slaughterville. You would not know it was a town unless you happened to notice the sign that says “Welcome to Slaughterville” while taking a drive out in the country. About 6or7 yrs. ago, P.E.T.A. invaded because they assumed the name had something to do with slaughtering animals. And wanted the name changed to Veggieville(I’m not joking). PETA was wrong, the town was founded by a man named James Slaughter many years ago(early 20th century. It made national news broadcasts. Many links to the story out there,,,, Here’s one of them

      • Judy

        Too ridiculous!
        Their next crusade: Going back in time to insist that Kurt Vonnegut
        re-title “Slaughterhouse 5″ — perhaps to “Time-out-House Five.” If anyone
        could approve of time travel, it would be Vonnegut. And while they’re at it, he could
        change his own name… perhaps to Vonnegrits.

  • Jeff

    <a href="">Millions of Unemployed Face Years Without Jobs

    Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.

    Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.


    Of course…it didn't have to get quite this bad. Not that we could have eliminated the recession and saved every job, but we could have reduced – even more – its effects on employment (or lack thereof).

    See: Did the Stimulus Help?

  • Jeff

    One more item. Krugman provides a wonderful analysis that shows how the past and the present "converge" into today's (in)actions…specifically those of the Republican party who cry fiscal responsibility but refuse to provide even a simulacra of "responsibility" by participating in a bipartisan deficit commission. Perhaps we need to provide new political party tag lines: the party of hypocrisy versus the party of pusillanimity.


  • betsy davenport, phd

    There has to be something fundamentally wrong with an economic system wholly based on living beyond one's means. Whether it is a family, a corporation or a government, it doesn't work for everyone to be functioning AS IF they had money they don't have.

    Moreover, I find it morally repugnant. Not only is it dishonest; it also holds consuming to be the point of life. We used to be called "people." Now we are "consumers," or "ordinary Americans," or "our working people," which last phrase made me pull the car over when I heard the tone with which Dubya used it — it was crystal clear that he had a proprietary understanding and that these people were not really people to him at all, but entities to be used.

    • Jeff

      No disagreement. But we were doing this to hide from ourselves the fact that we were really losing our economic footing. Instead of reinvesting and rebuilding America so that the real purchasing power of workers could increase, instead we mortgaged (and remortgaged) our assets to buy other assets. As long as there were more suckers pulled into this ponzi scheme we could remortgage our way out of debt, pull out more money, buy more things and on and on. We never had to face the fact that our meager salaries never made it possible for us to really afford that $50,000 SUV since we could just get another equity loan to pay for it.

      We are now at the point where we need to rebuild and, I fear, that won't happen. As crazy as this sounds…we need Sarah Palin as president because if she is elected America may finally wake up. Of course, if she really were elected…it may be too late for us.

      • betsy davenport, phd

        Yes, even your use of the word "we," as though there is a cohesive group that can rebuild, is an anachronism. My mother, voluble usually, would literally go purple and wordless when the word "Nixon" came over the radio on top of the refrigerator. We were Quakers, and I thought peace was an American value. Then I was rudely awakened by Reagan's election; I did not know anyone who voted for him and naively thought he could not be elected.

        Maybe it was due in part to ADD that even my parents' congenital liberality and consequent outrage at the "conservative" masses did not adequately inform me about the truth in this country. I find it embarrassing to be part of a populace that considers itself superior in every way even in the face of mounting evidence to the contrary.

        I mean, torture? “I wasn’t using my civil rights anyway.” I can only conclude that our schools are profoundly inferior, and I don’t mean that kids don’t do as well on tests. I mean, they can’t think! To criticize an educated president for his education is bizarre in the extreme.

        • Jeff

          For a brief moment we did get to see that cohesive "we" at work when Oh!bama harnessed the power of the Internet to bring together millions of people. But once he got what he wanted – elected to the presidency – that cohesive "we" was dropped like a hot potato.

          "I find it embarrassing to be part of a populace that considers itself superior in every way even in the face of mounting evidence to the contrary." – I have a post about this that I've been working on. There are reasons why we ignore evidence.

          But this discussion is getting depressing. Let's focus on the other important issues that occupy the American psyche. So…ya think Avatar is gonna win a ton of Oscars, or wa? ;)

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