In this video, Peter Temin, a highly respected expert on the Great Depression*, discusses some of the revealing parallels between that era and our current financial and economic plight with Marshall Auerback. Don’t be deceived by the leisurely pacing of this conversation and Temin’s soft-spoken manner. Temin in his measured way sets the stage for discussing how the trajectory we are on, which is undoing more and more social safety nets and job security, which are fundamental to trust, does not merely lead to lower productivity and hence hurts everyone, including the wealthy, but also puts us on a trajectory towards a dystopian future.
From the overview at INET:
Peter Temin, currently Gray Professor Emeritus of Economics, MIT, and former head of their Economics Department, has written extensively about the Great Depression. He argued persuasively in that book that the cause, spread and recovery from the Depression must be found in the monetary and fiscal policy regimes amongst the authorities of Great Britain, the US, France and Germany. The Great Depression, according to Temin, was the result of a shock to the system produced by World War I, coupled with an ideologically constrained response that exacerbated a bad situation and turned it into a crisis.
Does this sound familiar?
In the 1930s, governments practiced austerity to try and preserve the gold standard. And what they did was turn a recession into the Great Depression. And that seems to be what everybody is doing now with austerity. The Eurozone is still struggling with deflationary pressures because of an intensely austerian philosophy promoted by the Germans. In the US, the GOP also appears wedded to cutting government spending (except, it seems, when it applies to the military). The United Kingdom, which has no particular debt problems, is doing austerity because the Conservatives are in power.
In other words, governments which have other choices are making the choice for austerity. In the 1930s, they were doing austerity because they were adhering to the ideology of the gold standard. In their minds, austerity was the only way to preserve the gold standard, which would eventually restore prosperity. Today the justification for it is debt. But debt for the United States is de minimus; our debt service is a minor part of our government spending. So you have to believe that there’s another motive, and that appears to be attack on the very foundations of the modern day social welfare state via class warfare.
* Temin’s short 1991 book, Lessons of the Great Depression, contains one of the most cogent analyses of why the Depression happened. Temin and Tom Ferguson also have written, hands down, the single best analysis of the collapse of Credit Anstalt: Made in Germany: The German Currency Crisis of July, 1931.