Hoards of pundits and experts argue over what to call our current recession, which began as a crisis in finance. Arguments will continue because whether the recession is really a depression, cannot be determined until more time has passed.

            When I first heard our current recession referred to as “Great Depression II” and “GP II,” I thought “How apt but unacceptable.”  But today when I Goggled the phrase (in quotes), 56,000 hits appeared. Not surprisingly, the term “recession” appears 100 times more often. I will use the term recession and “deep recession“ even though history may eventually call it “Great Depression II.”

The typical comments on the web about the effects of the recession can best be described as stories of stress, pain, fear and suffering. Their missives are social tragedies because they are stories of parents struggling to find food for hungry children and of breadwinners getting laid off. They are stories of the inability to pay for medical treatment, which lays the pathway to early death, just like the third world.

            Early Americans believed that pain, hunger, and suffering lead to strong character and close communities. But now contemporary Americans seem to view “suffering” as eating at home rather than going out; or as taking a vacation by car instead of jetting to the Caribbean.  

time-the-new-frugality-cover_resize            Time Magazine splashed “The New Frugality” as its cover story this week. The story claimed that the “Great Recession” is transforming how we spend, whom we trust, where we save and what we really value.” Time had just conducted a scientific, nationwide survey that found half of the public admitting to feeling hardship in general. Nearly a quarter had been unemployed not by choice. And, of course, we are spending less, at least on the nonessentials.


         The most remarkable finding by the Time survey was that nearly two thirds “predict they’ll continue to spend less than they did before.” Even people earning more than $100,000 a year were talking about how they spent less, especially on luxury items.

            On the basis of all of these types of findings, journalists tend to claim that the recession is affecting everyone. The truth is that the lifestyles of the super-wealthy remain basically unchanged, while the middle and poverty classes are struggling with day to day subsistence.

New national survey findings by the Pew Research Center Trends project were released as Luxury or Necessity? The Public Makes a U-Turn.  Here is a synopsis of their discovery about how American adults are adapting to the economic depression:

·         Over the past few decades, Americans have been increasingly viewing all home appliances as necessities rather than luxuries. All of a sudden in the past 4 months that trend has reversed. Now we are less likely to view microwaves, home air conditioning, dishwashers, and clothes dryers as necessities. Already in 4 months these appliances have lost 10 years worth of growth in their perception as necessities.

·         Eight-in-ten adults have taken specific steps of one kind or another to economize during these bad times. Almost six-in-ten say they are shopping more in discount stores or are passing up name brands in favor of less expensive varieties

·         One-in-five adults say they are following the example of first lady Michelle Obama and are making plans to plant a vegetable garden to save money on food

·         Consumer reaction to the recession is being driven by specific personal economic hardships as well as by a more pervasive new creed of thrift that has taken hold both among those who’ve been personally affected and those who haven’t.

·         Nearly half say they or another household member has lost more than 20% in a retirement account or other investments.

·         About two-in-three American families have faced major economic problems such as loss of a job, major loss of investments, or trouble with mortgage payments in the past year.

·         Children, young adults, women and the less affluent are the most likely to have been troubled or to face tragedy.  


Taken as a whole these findings allow us to confirm that small shifts values have occurred within the American public, and perhaps around the world. That change consists of dropping or chipping away at materialistic, consumption values. high-price-of-materialism_resize

For those like Tim Kasser, author of The High Price of Materialism, this must be good news. Although the Pew survey’s discovered a drop in the perceived meaning and value of major consumer items, the small drop may be finicky rather than long lasting, and superficial rather than deep.

            Last month the Archbishop of Canterbury proclaimed that the recession had challenged the common belief that material possessions lead to contentment.  On Easter Sunday, he preached for voluntary limits on “human acquisitiveness and sexual appetite.” I don’t know how sex slipped into hissermon, but let’s not get into psychoanalysis.

            The important point he made is that contemporary society promotes harmful social values of excessive acquisition of a many nonessentials. These values have blinded us from observing the harm we do to the environment and our great insensitivity to the subsistence suffering of millions of people in American and around the world. This is a failing not just of Catholics, but also of people of every form of religion and non-religion.



            Have you noticed that people only give economic explanations for the current economic crisis? Well, actually a few people give non-economic explanations, like greed, for instance.

            Likewise, in trying to predict our economic future, have you noticed that mostly the arguments are grounded in economics, politics, and a little bit of psychology?

            Put on a lens of a sociologist or anthropologist for a few moments to see things a bit differently. Enter, Karen Ho, an anthropology professor at the U of M. Dr. Ho got a job on Wall Street in an investment bank for nearly a year in order to study the culture and organization of Wall Street, particularly with regard to dealing with financial crises.

            You can read some of her views in a Star Tribune interview, and a more in-depth analysis of her research in the academic journal, Cultural Anthropology (Vol. 20, #1, pp. 68-96, 2005). Or you can wait for her book to be published in July 2009.

            In her article, her interviews and public presentations, Karen Ho gives a compelling description of how Wall Street (the network of financial institutions) beginning about 1980, transformed and dominated American business by successfully campaigning for what she calls a “culture of liquidity,” by which she means organizational turnover and instability. A common tactic was takeover in order to liquidate a company’s assets. She concludes that Wall Street, with the control of capital, forced American businesses to continually restructure, downsize, outsource, and otherwise focus on short term planning, and the bottom line.

            Furthermore, Wall Street followed its own liquidity prescription for American business. In addition, Wall Street in its excitement took the primrose but deadly path of hedge funds, derivatives, securitizations, credit default swaps, and other elements of shadow banking.

            In her scenario, little by little the global economic system bought into the Wall Street model, seduced by the overvalued financial instruments and financial culture that appeared to be economic nirvana. Wall Street shadow banks marketed giant ponzi schemes and the remainder of the world didn’t want to lose out on the party.

            The tragedy of the culture of liquidity was the corporate sell off and neglect of organizational capital, human capital, research and development, and other resources with long-term value.

            Her view, and I subscribe to it, is that Wall Street has left us with a bankrupt financial sector and ailing manufacturing industries with greatly eroded capacity and value. Professor Karen Ho points out that companies like GM were the darling of Wall Street while they were downsizing, buying mortgage businesses, and designing bigger and bigger SUVs. GM and other such American businesses are now left with a relatively uneducated, poorly skilled workforce, and little capacity to innovate.

            The state of education and job training in American cannot be blamed on corporate America alone.  The politics of unequal, discriminatory financing of K-12 education have done much to hold it hostage, while the quality of learning in our trading-partner nations improves.

            Karen Ho does not argue this, but I think it follows that to compete in the global economy over the long-term, Americans and American businesses need a financial 12-step program to overcome addiction to self-centered consumption and investment growth-at-any-cost.

            Corporate America needs some time to reflect on what it can do best, do it with impeccable quality, and give good jobs and benefits to as many Americans as possible. Corporate America cannot do that with Wall Street breathing down its neck, so to speak. From their self-serving behavior in the past six months, it is clear that neither Wall Street nor Corporate America will reform on their own. It is up to the Federal Government to exert new leadership.

            Ironically, the Secretary of the Treasury for the first two years of the last Bush Administration, Paul O’Neill, holds a similar view of the Wall Street. On CNN’s GPS Program he recently called for truth and transparency on Wall Street. He would order the top 19 financial institutions to put the ratings classes of all their assets on the Internet for the public to see. He then would create quarantine accounts for the bad assets, only allowing public funds to be spent on the non-quarantined assets.

            Even if such reforms were made, the road to recovery will be rocky because we have come to expect the material comforts of living in financial bubbles. As millions of pensions have been converted to individual 401k accounts, the majority of Americans have a finger in Wall Street. Even if our daily moods don’t swing with the markets, we still pray for our retirement accounts to soar again.

            How then do we get out of the spiraling culture of corporate liquidity?  Establishing a modern, effective regulation system and other reforms in Washington DC will help. However, it is doubtful that we can successfully complete its financial addiction recovery program without learning to live with less, without accepting the need to sacrifice for the greater good. It is the perfect time to study Marc Lesser’s 2009 book, Less: Accomplishing More by Doing Less.

            Those with jobs and a retirement fund can afford to allow the economy to slowly recover from its ailments. But those unemployed, underemployed, or otherwise suffering from the lack of means to acquire necessities, cannot afford the luxury of a long, slow recovery. The rest of us must empathize with them and be generous, both personally and through public policy.

            For long-term prosperity, we need to work for the economy to stabilize itself without depending on another big bubble. This is the time to re-define patriotism to include sacrifice, modest lifestyles, and acting as a “Good Samaritan” to those around the world who are truly in pain and suffering.

            Should you be skeptical of my advice on returning to the ethics of the Good Samaritan, read the wonderful 2008 book by Deborah Stone, The Samaritan’s Dilemma: Should Government Help Your Neighbor? Professor of government Deborah Stone began advocating for an altruistic government long before the latest financial bubble burst. With the deep recession leaving so many jobless, hungry, and otherwise suffering, her powerful call for a moral awakening is even more urgent.




One of the most important scientific findings by sociologists is that people who lose their jobs during the prime of their careers end up also losing a lot of social capital (less involvement in their communities). Such a loss is tragic not only for those unintentionally unemployed, but for their communities and societies as well.

            In my last posting, I asked the question: “Where are the sociologists in a time of financial crisis?” I found a major study that shows the type of research that can be done by sociologists to help us evaluate the full impact of the current economic crisis.

            Jennie Brand, assistant professor of sociology at UCLA, earned her PhD at the University of Wisconsin and carefully analyzed data from the Wisconsin Longitudinal Study. In her article with Sarah Burgard, which was published in the September, 2008 issue of Social Forces, she confirmed that job loss produced major drops in social capital, that is, the ability to use ties to other people to help them and others function more effectively.

            Specifically, this loss of social capital meant that people displaced from their jobs in early or mid-career became less likely to be able to network to get another job, but also to get and give social support in general.

            Jennie Brand’s study involved workers during the period of 1975 to 2004, so it does not include those unemployed during the 2008 economic crisis. And it also was limited to high school graduates, but despite these limitations, the study gives very generalizable findings because it was based upon systematically following and re-surveying many people for many years.

            The crisis in community involvement is more sociological than psychological. It consists of changes in people’s inter-connectedness to other people. Think of it as rips in the social fabric.

            During the past year, 1.9 million Americans lost their jobs, with 533,000 losing them last month. That is the largest loss of jobs in any one month since 1974, according to the BLS report. The percent underemployed now is 12.5%. The underemployed are those who are unemployed or working part-time but seeking full-time work, but not including those unemployed but no longer looking for work. Another way of looking at the situation is that one in eight American workers is partly or fully displaced from their jobs.

            The principal conclusion from all of these data is that not only will the period ahead be one of financial crisis but one of social crisis as well.