Great Recession V Great Depression

Depression V Recession The Great Recession of 2009, which in economic terms lasted two quarters but for many people stretched out quite a bit longer, was billed as the worst economic event since the Great Depression. This provides us with an opportunity to examine the two events, their respective time periods, and what sort of similarities and differences we can determined between them. The 1920s were known as the roaring twenties, and were considered a boom time.

The period after the First World War saw significant shifts in American life, in terms of standard of living and how people lived. The 20s saw a significant shift towards urbanization, fueled by job opportunities that were emerging in white collar sectors. The term urban is juxtaposed against rural -- in many cases these areas were what we would consider small country towns. But the shift away from the farm was a profound thing, and many major cities did begin to grow rapidly during this period.

Technological change drove many lifestyle changes. The automobile was just starting to become mass technology at the start of the war, but with newfound prosperity and increased production capacity it went from a luxury to a life necessity in the 1920s. Movies were another technology that gained in social importance during this period, as did radio, these emerging as the two most popular forms of entertainment.

Music evolved during this period as well, again fueled by technology, both the radio and the phonograph, and the introduction of jazz marked a move toward modern musical forms (Sullivan, 2014). In Winter Dreams, Fitzgerald captures some of these themes, in particular the theme of upward mobility and the American Dream. The main character, Dexter Green, is ambitious, and pursues a pretty girl initially as the embodiment of his ambitions. He eventually moves to New York, where he makes a lot of money in business.

There is a moment where he realizes that his old dreams are not relevant anymore. The themes of wealth, upward mobility, of a new wealthy class, and of urbanization all play in this story. So the 1920s are reflect upon as an era of excess, where wealth is not only possible but relatively easy for the ambitious, and society is changing in some very significant structural and sociological ways.

From an economic perspective, the excesses were fuelled in part by very loose economic policy, known as laissez-faire economics (or "let it be"). This approach creates high levels of risk and volatility, such that boom periods as in the 20s are very strong, but bust periods can be just as strong (Investopedia, 2014). World War I contributed significantly to the boom of the 1920s, because of the destruction it wrought on Europe. The war brought about a reshuffling of the power bases in Europe.

Older, weaker empires like the Ottoman fell, Germany collapsed, and many other countries were forced into prolonged periods of rebuilding. Britain was the strongest empire left in Europe, but America was now the world's most significant power, having sat out most of the war and in the 1920s now both selling goods to Europe and lending the Continent money for rebuilding.

The 2000s There some irony in the fact that the Great Depression saw the introduction of more structure and regulation to the economy, and the 2000s began with the removal of some of that structure, in the unwinding of the Glass-Steagall Act. The removal of banking restrictions in 1999 led within just a few years of the same kind of fast money and deceptive banking practices that created both wealth in the 20s and Depression in the 30s (Rickards, 2012). There were also significant societal shifts.

First, the Internet had a transformative effect on the way our society communicates in particular, spawning entire new industries the way that the automobile did. This created a lot of jobs, a lot of economic speculation and it brought about social liberalization as well. A new moneyed class was created, not just from the Internet but from changes overseas where more people were gaining incredible levels of wealth and immigrating.

But the new technology has given rise to many new applications of knowledge, and much more knowledge available much more easily to people as well (Berger, 2013). One difference between the two generations is that in the 1920s there was a genuine sense that anybody with ambition could become wealthy, as with Dexter Green. Fitzgerald embodied this sentiment where social climbing was important, but wealth was just something you could randomly achieve -- the wealth-building was never an important element in his characters.

The 2000s saw a different view of the American Dream. With America losing jobs to overseas instead of being the beneficiary of overseas demand, the American Dream in the 2000s, for those not in the Internet business, was tied to real estate. It was the pursuit of that dream via real estate that gave us a housing bubble, not unlike the stock market bubble in the 1920s, which was the embodiment of the pursuit of easy money through investments, something that had become available to everyday people.

But the sense that the American Dream was dead was mostly for the average American. In both decades, the aristocratic class saw the decade as filled with opportunity for great enhancement of wealth, and these were the people driving the gains in the economy, and ultimately its crash. They were also the people who ended up well-insulated in the 1930s and 2010s, less affected by economic hardship, at least in terms of standard of living (Escow, 2014).

Fixing the Problem Perhaps the first step is to define the problem, but it seems clear that one of the factors is that while we all dream of upward mobility, it is not necessarily attainable anymore. Dexter Green, ten years later, is not in a position where he can't go home; he's in a position where he has to go home because he has no money and no job. The corrective actions taken in the 1930s to reduce economic volatility had a profound effect on the middle class in America.

The rich were still rich, maybe just not as.