(Roughly) Daily

Your correspondent is headed away on his annual pilgrimage to the land of banked dunes and deep-fried delights.  Regular service will resume on or around August 27.  Vacations can be a time for retrospection.  In that spirit, an invitation to think about the last ten years…

2008 was a big year: Senator Barack Obama was elected president of the United States,  “Satoshi Nakamoto” published “Bitcoin: A Peer-to-Peer Electronic Cash System,” SpaceX became the first private, commercial company to put an object into earth orbit, China wowed the world with its host ceremonies for the Summer Olympic Games…  But of course, 2008 was also the start of the Great Recession…  which was bad.  Really bad:

Total U.S. household net worth dropped by $11.1 trillion in 2008.

The median income for 25-to-34-year-olds in America, $34,000, hasn’t budged since 1977, adjusted for inflation.

Median household wealth collapsed.
2007: $126k
2016: $97k

The number of Americans worried about the economy multiplied nearly sixfold.
2007: 16 percent
2008: 86 percent

In 2016, the median wealth of a family headed by someone born in the 1980s was 34 percent below the level of earlier generations at the same 2007: age.

Mutual funds lost a third of their value: -38 percent.

The market value of all publicly traded companies was cut in half.
October 2007: $63 trillion
March 2009: $28.6 trillion

From 2005 to 2009, the median value of stocks and mutual funds owned by whites dropped by 9 percent.

The median value of holdings for African-Americans dropped by 71 percent (probably because of pressure to sell when prices were low).

Between 2007 and 2013, wages declined for the bottom 70 percent of all workers.

The retirement savings of black families fell by 35 percent from 2007 to 2010.

In a 2016 survey by the Fed, 28 percentof working-age adults said they had no retirement savings whatsoever.

The racial wealth gap, already large, ballooned.
Whites: $171k
Hispanics:  $20.7k
African-Americans: $17.6k

In terms of household wealth, every group suffered — but some more than others.
Hispanics: -66 percent
Asian-Americans: -54 percent
African-Americans: -53 percent
Whites: -16 percent

Consumer credit-card debt at the end of 2017 was over $1 trillion (about 30% higher than in 2008).

Millennials have taken on at least 300 percent more student-loan debt than their parents’ generation.

The unemployed took many more weeks to find work.
May 2008: 7.9
June 2010: 25.2

In a December 2017 poll by YouGov, 38 percent of those surveyed said they didn’t know when they’d be debt-free. 30 percent of respondents thought they’d never be out of debt.

63 percent of Americans say they don’t have enough money in savings to cover a $500 health-care expense.

In 2017, women had nearly 500,000 fewer babies than in 2007, although there were 7 percent more women of prime childbearing age.

The suicide rate rose 4 percent from 1999 to 2010: 4,750 additional deaths.

24 million adult millennials, or 32 percent, still live at home.

79 million Americans live in a “shared household” with at least one extra, nonfamily resident.

More college grads moved in with their parents.
2005: 19 percent
2016: 28 percent

As of 2017, only 34.2 percent of homes have recovered their value from before the recession. (Still below 2008 value.)

From 2000 to 2015, homeownership declined in 90% of all U.S. metropolitan areas.

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Frank Rich explores the lasting impact of that crash:

…the collapse of Lehman Brothers kicked off the Great Recession that proved to be a more lasting existential threat to America than the terrorist attack of seven Septembers earlier. The shadow it would cast is so dark that a decade later, even our current run of ostensible prosperity and peace does not mitigate the one conviction that still unites all Americans: Everything in the country is broken. Not just Washington, which failed to prevent the financial catastrophe and has done little to protect us from the next, but also race relations, health care, education, institutional religion, law enforcement, the physical infrastructure, the news media, the bedrock virtues of civility and community. Nearly everything has turned to crap, it seems, except Peak TV (for those who can afford it)…

Read the full essay: “In 2008, America Stopped Believing in the American Dream.”

Then consider Steve Bannon’s take on the same event:

The legacy of the financial crisis: Donald Trump. The legacy of the financial crisis is Donald J. Trump. And I can give you the specific moment: When they put Lehman in bankruptcy, and the geniuses didn’t understand that it was inextricably linked to the commercial paper market. Hank Paulson, Treasury secretary, and Ben Bernanke, the head of the Federal Reserve, they went to see Bush three days later. They told him, ‘We need a trillion dollars in cash, and we need it by five o’clock.’”

And in a profile of courage, President Bush says, “Not my problem. You gotta go to Capitol Hill.” They go up to Capitol Hill, they put everybody in a room. They make them all put their BlackBerrys outside, and they walk in, and Bernanke, who’s not an alarmist, says, “If we don’t have a trillion dollars by today, the American financial system will melt down in 72 hours. The world financial system will melt down in two weeks, and there will be global anarchy.”

And by the way, this was completely brought on by the elites of the country and Wall Street. When I got to Harvard Business School in 1983, a bunch of professors were coming up with a radical idea that’s had a horrible negative consequence on this country and to the fabric of our society: the maximization of shareholder value; this was preached as High Church theology. The whole thing of the financialization of Wall Street, of looking at people as pure commodities and of outsourcing and globalization, came from the business schools and the financial community that had these radical ideas, and nobody kept them in check…

I think you’re starting to see the deindustrialization of the country. We stopped investing in the country. Domestic investment’s all going over to China. We deindustrialized Western Europe. Brexit and 2016 are inextricably linked, okay?

Workers know this. It’s the labor vote in the midland counties that drove Brexit. This is what’s so obvious the Democratic Party misses. Donald Trump’s president because of working-class Democrats. The Trump movement is made up of people like my father, the Marty Bannons. My whole household was working-class Democrats. These are adamant Trump supporters because they understand Trump supports working-class people…

While the prescribed remedies may be wildly different as between the progressive writer and the Nativist provocateur, the diagnosis is eerily similar.  Read Bannon’s interview in full at “Steve Bannon on How 2008 Planted the Seed for the Trump Presidency.”

More perspectives on 2008 at “Ten Years After the Crash, We Are Still Living in the World It Brutally Remade.”

And lest we think too parochially, consider this argument that the Georgian War (Russia’s engagement in Georgia) in 2008 was (another) product of the same currents that yielded the financial crisis: “The Turning Point of 2008“… which, in turn, helped spur the growth of Russia’s use of criminal hackers: “It’s our time to serve the Motherland.”

* Kenneth Arrow

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As we make our way down memory lane, we might recall that it was on this date in 1945 that George Orwell’s allegory, Animal Farm– A Fairy Story, was published.  (The U.S. edition, published in 1946, dropped the sub-title.)   While it has never disappeared from conversation about politics and governance, Animal Farm is enjoying a renaissance in these increasingly Nativist times.  But while Orwell rings only too relevant these days, we might do well to keep in mind his friendly competitor (and one-time school master), Aldous Huxley, and Huxley’s Brave New World:

In his classic 1985 book Amusing Ourselves to Death, Neil Postman wrote of the difference between George Orwell’s and Aldous Huxley’s visions of fascism.

“Orwell feared those who would deprive us of information,” wrote Postman. “Huxley feared those who would give us so much that we would be reduced to passivity and egoism. Orwell feared that the truth would be concealed from us. Huxley feared the truth would be drowned in a sea of irrelevance.”

More at “Amusing Ourselves to Trump.”

For a nifty cartoon version of the Orwell-Huxley distinction, see here.

And for a further exploration of this modern day Scylla and Charybdis, see “Orwell feared that what we fear will ruin us. Huxley feared that what we desire will ruin us.”

First edition cover

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